The auto market bounces back: Auto sales rebounded in February, recovering from the 10-monthlow recorded in January, according to figures from the Automotive Marketing Information Council (AMIC). Distributors sold some 7.4k units last month, up almost 20% m-o-m.

Driving the jump: A22% m-o-m uptick in passenger car sales drove the trend, with 5,852 units sold. Truck sales also rose almost 9% m-o-m to 1,026 units. Bus sales remained almost unchanged, with a less than 1% m-o-m decline to 519 units.

Sales are also up from where they were a year ago, recording a 22% y-o-y increase on the back of a 38% y-o-y increase in passenger car sales. Bus and truck sales were both down in comparison to where they were a year ago, falling 32% and 2%, respectively.

Will the upward trend continue? It’s anyone’s guess. Passenger car prices saw notable drops following the float of the EGP and significant FX inflows and we’re expecting prices to continue to fall as more cars enter the market, which could boost sales. Some buyers have adopted a wait-and-see approach as they hold off on making car purchases in hopes that prices will fall further — this started following the announcement of the USD 35 bn Ras El Hekma agreement.

Our take: The auto market will stabilize when sellers and buyers believe that the EGP / USD exchange rate has stabilized and stop thinking of cars as an investment.

SOUND SMART- Cars became one of several safe haven assets Egyptians have been putting their money into to hedge against a weakening EGP, alongside gold and real estate. This makes it somewhat difficult to differentiate the real demand for cars from artificial demand.

The caveat: AMIC figures reflect data contributed by member distributors, who include most (but not all) industry participants.

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