With the third annual Egypt Automotive Summit scheduled to take place on 13 December, Daily News Egypt met with the sales manager of Fiat Chrysler Automobiles, Emad El-Shorbagy, to talk about his vision for the summit and what should be reviewed during the current year.
What do you think of the third annual Egypt Automotive Summit?
The Egypt Automotive Summit is considered the only conference that brings together all parties working in the automotive sector, including manufacturers and representatives of international companies, agents, local suppliers, feeding industry companies, and automotive companies. The automotive industry is considered the second largest investment opportunity in Egypt after real estate.
What are the main themes that should be discussed regarding the future of investment in the automotive industry?
The automotive sector is the engine of the technological industry that is only preceded by aviation and space industries. The Egypt Automotive Summit is the biggest event to bring together the stake holders of the automotive industry and government representatives, which include the ministers of industry and trade, finance, and investment.
The conditions the industry is suffering from in Egypt has increased the importance of the conference this year, as Egypt has lost huge investment opportunities as a result of a series of decisions that negatively impacted the industry within a short period of time, which made any feasibility studies carried out by international companies to enter the Egyptian market very difficult.
What are the main challenges that face the automotive sector in the current period?
I think the main challenges include not adopting a fixed exchange rate for the Egyptian pound, the inability of transferring the profits of international companies abroad, and the severe delays in the issuance of the automotive industry strategy, as the strategy was delayed for over three years since it was discussed during the first Egypt Automotive Summit. These three challenges have resulted in international companies diverting their investments to Morocco and Algeria.
This is besides the rise in car prices that have increased by almost 100% compared to their actual prices 15 months ago. This hike in prices created another problem. Cars that could have been afforded by a certain segment of buyers have now become too expensive and only affordable for buyers of higher income. This goes back to the decline of the purchasing power of the Egyptian pound and the economic pressures experienced by citizens, which led them to sell these cars into a narrower and smaller market; thus, adversely affecting the chances of sales, profit margins, and investments.
The prices of spare parts have also doubled in less than a year, making buyers reconsider their priorities when buying a car.
All of these obstacles have led to a decline in the number of sold cars and in the revenues of service centres, which could affect the quality of these services due to their high cost.
How do you see the impact of the automotive industry strategy on the market and the future of investments?
This year’s summit may have a chance to push the government to speed up the completion and approval of the strategy in order to activate it. This will enable international companies to determine long-term investment opportunities under fixed laws, not transitional or temporary laws. The strategy should consider the current situation and the necessary period of time for all parties of the industry to amend their plans in accordance with the strategy’s criteria. The strategy should also benefit all companies and not be the of advantage for a very limited number of companies, pushing the others out of the competition.
What do you think of the state’s monetary policy?
Although the decision to float the Egyptian pound ended the problem of multiple exchange rates, cars’ prices rose because of the customs paid in US dollars, which led to doubling the customs value. The effects of such a move varied from one car to another, with the diversity of customs rates being labelled according to the car’s engine capacity and the country it was manufactured in.
What is your vision for investment opportunities in the Suez Canal Economic Zone and ways to grow the feeding industries?
International companies are looking for new markets and buyers, not for countries to manufacture in. This would only happen if the production is transferred to a specific country that would offer reduced manufacturing costs and create new markets for their products due to trade agreements, including customs advantages and other facilitations.
I see that the Suez Canal Economic Zone is geographically exceptional, and enacting special laws as free zones and getting rid of bureaucracy will provide a suitable environment for industrial activities, which would facilitate production and exports.