Expert: Car Prices Need 5 Months to Drop After Dollar Decline

The Egyptian car market continues to witness heated debate over price movements in recent weeks, particularly following the noticeable decline in the US dollar exchange rate against the Egyptian pound. While expectations have been divided between those predicting an imminent price drop and others forecasting the opposite, a new expert opinion has emerged to clarify the picture. Omar Balbaa, head of the General Automotive Division at the Federation of Egyptian Chambers of Commerce, confirmed that the dollar's decline is a positive development for the automotive sector, but stressed that its impact will not be immediate.

No Instant Effect on Car Prices

Balbaa explained that the relationship between the dollar's decline and lower car prices is not instantaneous, but rather gradual. He pointed out that the Egyptian car market requires a stability period of up to five full months before consumers can see the effect of the currency drop reflected in showroom prices. This timeframe is necessary to allow the market to absorb existing inventory that was imported at the previous, higher exchange rate before new pricing structures take effect.

Old Inventory Delays Price Reductions

The head of the automotive division attributed the slow impact of the dollar's decline to the fact that most cars currently offered for sale were imported at the old, higher exchange rates. He noted that dealerships, companies, and traders hold significant stockpiles of vehicles that were purchased and stored during the period of the dollar's peak. This means that the market must first clear this inventory before lower prices can emerge. Balbaa added that the long supply chain—spanning importation, storage, and distribution from agents to dealers—creates a time lag between currency improvement and actual price reductions.

Dollar Rises Faster Than It Falls

In a related observation, Balbaa highlighted a key market paradox: a rise in the dollar's value is reflected quickly in car prices, while a decline takes much longer to reach the end consumer. He explained that this is due to the lengthy chain of importation, storage, and movement from agents to distributors to dealers, which slows down the price adjustment process during downturns compared to upturns. The expert also noted that the phenomenon of "overprice" has significantly decreased in Egypt across many car models, offering a positive sign that the market is beginning to absorb the new economic realities.