December 2, 2020

Tightened Regulations on Consumer Finance and Declining New Car Sales to Slower the Market Growth: Ken Research

Rising trend in the new and used car prices is expected to continue further as the imports of components are still expensive
Introduction of VAT towards the end of 2016 is expected to adversely impact the demand for cars leading to a fall in the demand for car finance
Private financing sector is expected to have an advantage over the banks amid the tightened regulations with regards to the share of loan in an individual’s monthly income and maximum loan limit
Though at a slow pace, the Egypt car finance market is anticipated to recover during the forecast period 2017-2021, from the fall in the credit disbursement that has been observed towards the end of the review period. The competition in the market is expected to rise amid the tightened regulations and the dealership financing would have an advantage over the banks since they are not bound by the regulations. As the price of new and used cars is displaying a consistent rise, the customers, expecting a further increase in the car prices are anticipated to buy immediately. This is expected to increase the demand for car loans and raise the amount of credit disbursed.
Many banks are in plans to expand more in terms of number of branches within the country. In Egypt, there are several untapped geographical regions for banking. Many people in Egypt are still dependent on the dealership financing while buying a car due to the lack of accessibility to banks. This has induced the leading banks in the country to focus on improving the reach for customers.
As a result of the new regulation of CBE on consumer lending, within three years the banks are expected to reduce the maximum loan extended to both single and corporate client. It will be reduced from 20% to 15% of the bank’s Tier I capital for a single client and 25% to 20% for a corporate client. The expectation is that reducing the share of a client’s loan from their monthly income after taxes, will increase the likelihood that customers will be able to repay their debts, while reducing the risk to the bank of credit default on the loan, or late payment. With regards to the new corporate loan structure, the aim is to reduce banks’ dependence on a few large clients and diversify their Tier I credit portfolios.
Ken Research in its latest study, Egypt Car Finance Market Outlook to 2021, observed that the introduction of the introduction of VAT by the government towards the end of 2016 is expected to adversely impact the automotive industry. The new car sales are expected to fall due to the increase in the cost to be incurred for the purchase of a car. Amid competition in the market, several players are in plans to introduce more bundling options in loans. For banks, car loans are a more attractive proposition when it is packaged with a suite of other products that cater to multiple customer requirements.
The Egypt car finance market is estimated to register a positive CAGR during 2016-2021. Increased accessibility to finance, new and attractive schemes and offers, increased rate of used car financing and such other factors are expected to be key drivers for a growth in the demand for car finance in the country.
The report provides information on the number of new cars financed, new and used car penetration, tenure of new and used car loan and the regions dominating the market in terms of credit disbursed and number of cars financed. It also covers the major players in the market such as Arab Bank, Bank of Alexandria, Bank Audi, National Bank of Egypt and Banque Misr.
Topics Covered in The Report
• Auto & Car Loans in Egypt
• New Car Sales in Egypt
• Used Car Sales in Egypt
• Cairo Auto Loan Market
• Auto Loans Market in Egypt
• Car Loans Industry in Egypt
• Applying Car Loan in Egypt
• Car Loan Brand New Market
• Financing Schemes Car Loans Egypt
• Auto Loans Terms and Conditions in Egypt
• Interest Rate Car Loan in Egypt
• Top Egypt Car Loans Banks
• Cairo Average Loan Rate
• Finance the Car in Egypt Process
• Car Financing Option in Egypt
• Auto Finance Opportunities in Egypt
• Compare Auto Loans in Egypt
• Vehicle Financing in Egypt
• Used Car Sales in the Egypt
• Passenger and Commercial Vehicles Sales in Egypt