Serious concerns dominate Egyptian automotive market following Brexit

The Egyptian automotive market received the news of Britain exiting the European Union (EU) with serious concern. Newspapers and news websites tracking the automotive market in Egypt addressed the impact of that decision on the Egyptian market.

Assumptions about depriving British products of the customs reductions included in the EU-Egypt Association Agreement have made their rounds. Such a decision would raise the prices of these products in the next period.

The agreement between Egypt and the EU triggered a gradual customs reduction on European cars in 2009, which will continue until 2019, at which time European cars will be completely exempt from custom fees.

Daily News Egypt looks at the possible repercussions of these events on nine brands in the Egyptian market that include models manufactured in Britain: MINI, Jaguar, Land Rover, Nissan, Aston Martin, Rolls-Royce, Toyota, and Honda.

Marketing manager of MINI in the Bavarian Auto Group, Ahmed Soliman, said that all MINI models are manufactured in Britain, except for the Countryman model, which is manufactured in the company’s factories in Austria.

Soliman added that MINI’s cars that are manufactured in Britain come to Egypt via Germany. Therefore, imports will be treated as European products and benefit from the customs reductions. The company will not be harmed from Brexit in this regard. However, this still depends on the parent company’s policy in the next period.

He further added that MINI’s most prominent cars in the Egyptian market manufactured in Britain are Clubman, Cooper, Cooper Paceman, Cooper S, and Cooper F55.

Nissan on the other hand, one of the most prominent companies in the market, will be impacted by Brexit. The company manufactures the Qashqai and Juke in its factories in Britain. Therefore, the import of these two models from the company’s factories in Britain will lose the benefits from the EU-Egypt Association Agreement.

Jaguar and Land Rover, offered in the Egyptian market through their agent MTI Automotive, may be the brands most affected by Britain’s decision. The companies improved their sales performance in the past few years, largely benefitting from the customs reduction.

However, the general manager of MTI Automotive, Ahmed Gharib, believes that discussing the effect of Brexit on British products in the Egyptian market may be premature, saying that his company continues to offer cars with the best prices and after-sales services.

Aston Martin and Rolls-Royce are manufactured in Britain, as well as Toyota’s Auris and Honda’s CR-V.

Models with 1,600 cc or less are subject to 40% custom fees when imported. A 15% sales tax and 3% development fee are also added. As for models with 1,600 cc to 2,000 cc engines, import customs fees stand at 80%, plus a 30% sales tax, and 5% development fee. The customs fees on models with engines larger than 2000 cc reached 135%, plus a 45% sales tax, and 8.5% development fee.

Head of the Egyptian Customs Authority, Magdy Abdel Aziz, said that Brexit means that the customs reductions and exemptions will not be applied to cars or other products imported from Britain.

Abdel Aziz expected Britain’s move to exit the EU to lead to other European countries doing the same.

The real effects of Brexit on exports and imports will not be visible for at least two months, depending on the size of trade.

Sources in the Egyptian Customs Authority expect that Brexit will not affect the agreements preventing double taxation on Britain.

There are over 50 agreements preventing double taxation between Egypt and foreign (including Arab) countries, including agreements with Austria, Algeria, Albania, Belgium, Germany, Russia, the United States, Bahrain, and the United Arab Emirates.



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