Reviving the car industry in Egypt

These thoughts were witten two years ago but the suggestions still are valid.

Cars have acquired an increasing importance in Egypt. This importance could be highlighted by the fact that there are 3,328,000 circulating on the roads and streets of Egypt  (CAPMAS 2003).

Cairo alone hosts 33% or over 1 Million units.Over the past few years numbers published by ATIC estimated the number of new cars pouring into the market each year at 100,000. This means that more than 67 % of the cars circulating are at least 10 years old if not more.These cars are using engines from old generation that are overloading the air with pollutants and particles.

Egypt has now almost 10 companies manufacturing passenger cars, additionally a network of feeding industry has been created.Since January 28 and the floatation of the Egyptian pound it has lost around 30 % of its value this loss was reflected immediately on the market and prices of all goods started an escalation.  The car industry, because it is dealing with a product that is elastic demand, has decreased which has affected the economies of these investments. Most of the car manufacturers have gone through a vicious circle of reevaluation and repricing to meet increased costs with an increase in price and a subsequent decrease in demand. Unfortunately none has reached the economy of scale GM assembled 24 passenger cars a day and a total of 94 cars and trucks daily this makes the total output of around 30000 cars per year far away from an economy of scale of 100000 units per year.  It is worth noting that a company like Renault manufactures 30 cars per hour from a single model. On the environmental front, unlike Europe and the United States, cars join the market and do not come out being continuousl recycled in use, as a result the streets of Egypt host a very strange mix of makes and model years some may have exceeded 50 years and have no historic value because they are in a very bad shape beyond repair and facelift. This situation adds to the burdens of the road structure and the air. At that point, a  project is suggested for the total replacement of Egypt Taxis to start with Greater Cairo and
Alexandria based on local production. The objectives achieved by the implementation of the project are:

  1. Reviving the car industry allowing some plants to reach an economy of scale.
  2. Replacing old technology highly polluting engines with cleaner one reducing the air pollution. This particular objective has a two-fold effect the first is improving the quality of life of Egyptian reducing over the long term the harmful effect of pollution on the health of Egyptians and improving the attractiveness to tourism.
  3. Upgrading the public transportation capacity and image to achieve a better standard for both Egyptians and tourists.
  4. Improving the fuel consumption, as modern technology engines are more economic.

Although it might seem a project related to industry but it touches several areas as environment, tourism, petroleum and health in addition to legislation. The suggested project is build on acquiring a production line of one or more of those out of production models suggested to be station wagon. This same business models has been adopted by all startups in the developing world.The second step is issuing a legislation that prevents renewals of cars older than 25 years for private and 10 years for taxis (based on usage rate) a three years transition period should be included.Third the manufactured cars should come out of the production plant equipped to operate on natural gas. Fourth swapping should be encouraged through a series of incentives to taxi drivers the funds of which could be generated from the various ministries involved and from international donors. A fund will be organized to manage this project.

Finally Old cars will be demolished and melt into pig iron again (sold as KG of Iron) collected funds from this project will pour back into the trust fund.


6 Responses to “Reviving the car industry in Egypt”

  1. 1 ]Dr. Ayman Makkawy April 29, 2007 at 6:45 am

    أحييك على هذا الموقع الجاد ، وأعلم أن لديك ثروه من الأفكار النميسه ، وان لديك القدره والشجاعه لإخراجها للوجود مثلما شجعتني على الترشيح للشورى ، وكنت تناديني على سبيل المداعبة بحضرة النائب ، وانت وانا نعلم بأن فرصة فوزي بالمقعد في هذه الدائرة بالذات تساوي فرصتي في الفوز بمقعد في مجلس العموم البريطاني !! ولكن ال152 صوت بحق كانوا وسام على صدري ومكافأة معنوية لكل من يعمل بلا يأس وبتجرد كامل من أجل حياة أفضل لهذا الوطن الجميل .
    ولعلي أتذكر معك مقولة السيد عبد الرحمن الكواكبي في الزمان الذي يضن علينا برجال مثابرون وجادون يصدقون النية ويعقدون العزم ولايتخلون عن الأمر حتى ينجزونه . ولو تأملنا تاريخ الأنسانية وما حققته من رسالات وإختراعات وثورات على الظلم أو الجهل او التخلف ، لوجدنا خلف هذا كله رجال أو نساء صدقوا العزم وواصلوا الطريق بكل ما وهبهم الله حتى حققوا لبني الأنسان ماهم فيه الآن .
    وأظن ان مصر الآن في اشد الحاجة لمثل هؤلاء الرجال والنساء ، المبادرين بالعمل والواثقين في الله ونصره ، وكلما زاد عددهم أقترب الأمل من التحققيق وشجعوا غيرهم أن يلحقوا بهم .
    ولا انسى ياصديقي العزيز أن أحييك على مقالاتك وخاصة عن مجانية التعليم والتي لمست بها كبد الحقيقة ووضعت يدك على الجرح ، وكذلك عن الميول اللإنتحارية لدى المصريين ، والذين يوصفون بأنهم اول من عرف التوحيد وآمن بالرسالات !
    ولقد طرحت سؤالا منذ خمسة أعوام ومازلت أسأله لكل من يقابلني او يتحاور معي عن مشاكل مصر ، وهو يتلخص في كلمات بسيطه : ماذا يفعل المصريون الآن ، وماذا يضيفون للتراث النساني ، وماذا يشغلهم وكيف يرون انفسهم كأمة بعد 20 سنه أو 50 ؟؟؟؟؟؟
    د/ أيمن مكاوي

  2. 2 rafiknakhla April 29, 2007 at 7:04 pm

    Thank you for your kind words, you are right I have thoughts that I want to bring out.
    It is a pitty that for decades we did not have a significant scientific contribution. In stead of looking forward we are looking backward we are seeking refuge in the past, and to advance one has to look ahead to the future, not the past.

  3. 3 ]Dr. Ayman Makkawy April 30, 2007 at 12:17 pm

    Dear Rafik
    Your photo is nice , try to bring the word Thoughts to the extreme left , and take Einstein words a little pit down .
    Now let’s think how to move ahead , and how we can turn our ideas and talk into action and collective effort .
    You remember my project for the Healthcare management diploma in AUC, where I discussed the gap between Knowledge and action , in this study you can find all the sins we are comitting as a nation and stopping us from progress .

  4. 4 yasser sharaf April 30, 2007 at 1:39 pm

    Dear Mr Rafik;
    I like the blog so much, I’m looking forward to seeing new commentators and share from your top gun friends as well.
    Sadly we didn’t contribute to humanity or human progress for over 50 years, but for the past 30 years our situation worsoned, not just by looking backwards, but also having no vision or planning. Moreover; what makes one lose hope is tainting of the Egyptians with a whole new value concept that I see no hope at getting rid of before decades to come. Our value system is disrupted and our vision sees no dialectic, just one side of everything.
    Anyway, congratulations on the new website. and by the way I agree with Dr Ayman’s comment about the photo, you should modify that.

    Yasser Sharaf, MD

  5. 5 Marwa Rakha May 5, 2007 at 1:31 pm

    This post is very informative and very well put. I see a great first draft of a plan that could brighten the future of our country. What is your next step? Who will you talk to to make it happen?

  6. 6 free image host October 19, 2007 at 12:48 pm

    Thanks a lot for this article

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