Volkswagen Group Africa (VWGA) has signed a new memorandum of understanding (MoU) with the Egyptian government to develop a feasibility study for the construction of a Body Shop and Assembly Line.
With the VWGA interested in assembling vehicles in Egypt in the future, this new development builds on the progress and mutual understanding achieved under the agreement signed in November 2023, to develop a feasibility study on a shared automotive painting facility collaboratively.
The automotive painting facility is to be situated within the East Port Said Industrial Zone in the East Port Said Automotive Zone (EPAZ) in Cairo.
Chairman of the General Authority for the Suez Canal Economic Zone, Waleid Gamal Eldien, Chief Executive Officer of the Sovereign Fund of Egypt, Ayman Soliman, and Vice President of the East Port-Said Development Company, Dr. Ahmed Fikry signed the agreement on behalf of the Egyptian government on the one hand, whilst the Chairperson and Managing Director of VWGA, Martina Biene signed on behalf of the group all in the presence of the Prime Minister of Egypt, Dr Mostafa Madbouly.
The signing ceremony which took place during the first day of the Egypt-EU Investment Conference hosted in Cairo on 29-30 June 2024, was also witnessed by Dr Mohamed Shaker El-Markabi, Minister of Electricity and Renewable Energy; Eng. Tarek El-Molla, Minister of Petroleum and Mineral Resources; Dr Hala El-Saeed, Minister of Planning and Economic Development; Dr Rania Al-Mashat, Minister of International Cooperation; and Valdis Dombrovskis, European Commissioner for Trade.
The agreement underscores the commitment of the government to bolster its automotive industry as the groundwork for the collaborative endeavours was laid by the prior agreement in November 2023.
The VWGA Chairperson, Biene in her remarks said: “The new strategic co-operation agreement with the Government of Egypt offers Volkswagen Group Africa an asset-light investment model, which shifts the investment focus from capital expenditure to operational expenditure.
“The agreement also presents us with the opportunity to progress the long-term plans to establish our presence in Egypt. Furthermore, Volkswagen is emboldened by the willingness of the government to explore an ingenious approach to realise the viability of the feasibility study. We are fully committed to working with the government of Egypt to make this project viable.”
The strategy of the Egyptian government
In June 2022, the Government of Egypt announced the introduction of the Automotive Industry Development Programme (AIDP), which aims to foster local value addition, increase vehicle production volume, boost and attract investment, and improve emission standards in the automotive sector.
The government aims to establish a Special Purpose Vehicle (SPV) to construct the buildings for the Body Shop and Assembly Line. Volkswagen Group Africa has expressed interest to utilise these facilities to assemble vehicles for the Egyptian market, after the successful completion of the feasibility study and its findings confirming viability.
