International Update

Egypt’s Automotive Industry Opportunities and Challenges

01 June 2023 #International Update

Egypt’s automotive industry is considered small, underutilized, despite the country’s market size, geographical location, and potential diverse portfolio of activities in manufacturing, assembly, and distribution. Dominated by fifteen active passenger/commercial vehicles assembly plants (mostly using imported components) and hundreds of auto-feeding companies (supplying locally manufacturing or international brands as well as selling manufacturer-approved spare parts), local automotive assembly plants produced around 51,000 passenger vehicles in 2022 (Source: Egyptian Automotive Manufacturing Information Council.) These figures are expected to decline in 2023 as a result of current global and local economic and supply chain challenges.

Nissan Motor, General Motors, GB Ghabbour Auto have been, for some time, Egypt’s main local manufacturers of passenger and commercial vehicles. Tier 2 and Tier 3 local manufacturers in Egypt are currently focused on industries such as tires and inner tubes, glass and windshields, aluminum parts, electrical wires, batteries, leaf springs, oil and air filters, upholstery material, as well as plastic parts and bumpers. Only two Tier 1 companies (Valeo and Brightskies Technologies) are currently present in Egypt, focusing on exporting their technologies to regional and international markets.

During the past years, local automotive manufacturers conveyed to the Government of Egypt (GoE) their rising concern over the impact of Egypt’s Association and free trade agreements with the European Union, United Kingdom, AGADIR member countries and Turkey on their ability to compete within a fair level playing field against imported zero customs vehicles.

Seeking to position Egypt as an automotive manufacturing and export hub, the GoE took two notable steps to address these concerns and take Egypt’s automotive industry to the next level. The first step offered export rebates for local automotive exporters, effective September 2021. The second step, in June 2022, witnessed the adoption of an Automotive Industrial Development Program (AIDP,) granting additional incentives for local manufacturers based on four criteria: local value addition, production volumes per year, value of new investments, and emissions. While the export rebates program has been activated and utilized by industry players, the GoE is in the final stages of finalizing the institutional set up of the AIDP, having recently adopted a law establishing a Supreme Council for Automotive Industrial Development and a Fund for Environmentally Friendly Vehicles.

Today, the Egyptian economy is facing several economic challenges that were augmented by the COVID-19 and Ukraine war crises. In response, the GoE has recently shifted policy to create an empowering environment for private sector-led investments, prioritize industrial localization, rationalize spending, and offer lucrative investment incentives, all of which are creating opportunities for foreign investors to maximize benefit from Egypt’s potential to become an automotive industrial hub. The attainment of this objective is complemented by benefiting from Egypt’s wide network of preferential free trade arrangements, strategic geographical location, cost-efficient, skilled labor, and a rapidly growing, young market of over one hundred million persons.


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