On the production side, the downbeat macro-economic outlook will lead to a contraction in passenger vehicle production growth of -- in ----, and in addition to the gradual phasing out of customs duties on European vehicle imports over the next - years, domestic production will face challenges as imports become increasing more competitive. In light of these factors, we forecast passenger vehicle production to decline by -.- on average over our forecast period of ---------. Domestic manufacturers will continue to face challenges of a weak Egyptian pound and a shortage of foreign exchange (FX) reserves until exports pick up and investor confidence returns to Egypt. These factors will raise production costs and will limit vehicle manufactures ability to pay for imported kits and components, and in turn negatively impact their production capabilities and limit vehicle inventories. Nissan Motor s Egyptian unit announcement on -- March ---- that it will halt plant expansion plans further reinforce our downbeat view on vehicle production in the country, which will face a challenging year ahead. ...Nissan Motor s Egyptian unit announcement on -- March ---- that it will halt plant expansion plans further reinforce our downbeat view on vehicle production in the country, which will face a challenging year ahead. The Japanese automaker announced plans to invest USD--mn in Egypt in ----, and we expect
...We expect a lack of improvement in private consumption fundamentals, such as unemployment and inflation, to translate into a fall in demand for new cars in the country. These faltering private consumption fundamentals in combination with the strong negative impact that a weak currency and limited access to foreign currency will continue to have on the Egyptian autos market will lead to a contraction of --.- in passenger car sales in ----. ...We expect a lack of improvement in private consumption fundamentals, such as unemployment and inflation, to translate into a fall in demand for new cars in the country. These faltering private consumption fundamentals in combination with the strong negative impact that a weak currency and limited access to foreign currency will continue to have on the Egyptian autos market will lead to a contraction of --.- in passenger car sales in ----. High inflation levels will act as a drag on private consumption as consumers disposable income and buying power weaken, tempering appetite for big-ticket item purchases in ----. Inflation in Egypt jumped to --.- in August (see chart below), driven to its highest level in at least seven years by a weakening Egyptian pound and an increase in electricity prices. Our Country Risk team forecasts headline inflation to reach --.- by the end of ---- as the impact of subsidy cuts, another devaluation of the currency and rising commodity prices continue to drive up consumer price inflation in Egypt, which will put pressure on consumer budgets, leading to a fall in spending on new cars.
...We forecast CV sales to contract --.- in ---- , and average an annual decline of -.- over our forecast period ---------, as the same economic headwinds affecting the passenger vehicle market spill-over into reduced demand for both light and heavy CVs. However, we believe that a positive outlook for the Egyptian construction industry will support our view that CV sales will relatively outperform passenger vehicle sales in ----. ...
