The rapid transformation of Egypt’s automotive industry

Egypt's automotive industry is experiencing significant growth and transformation, driven by strategic initiatives from both the government and private sector players. The country's efforts to become a regional hub for automobile production and export are paving the way for a new era of automotive manufacturing in the Middle East and Africa. Here's a look at the latest developments, key players, and future plans in Egypt's automotive sector.

The cornerstone of Egypt's automotive growth strategy is the Automotive Industry Development Program (AIDP), which aims to localize auto manufacturing and expand exports. The program provides incentives for global automakers to boost local production and deepen domestic supply chains. General Motors (GM) is among the major companies committed to expanding operations under this framework, targeting increased exports to North Africa and the Middle East. The AIDP also supports local job creation, with GM’s Chevrolet Optra set to be the first model registered under the program, featuring significant local added value.

The Egyptian government, under the leadership of Prime Minister Mostafa Madbouly, is playing an active role in advancing the automotive sector. Recent discussions with Nissan and Kasrawy Automotive Group focused on expanding local production and exports. Nissan, which currently holds a 13.5% market share in Egypt, plans to invest an additional $55.9 million by 2026 to enhance its manufacturing capabilities. Kasrawy Group, on the other hand, has already exported over 6,000 locally assembled cars and aims to produce 23,000 more vehicles over the next five years.

These developments align with the government’s broader vision of positioning Egypt as a regional automotive manufacturing hub. The establishment of the Supreme Council for Vehicle Manufacturing in 2022 underpins this strategy, offering incentives and support to both local and global players.

Egypt is witnessing a surge in demand for electric vehicles (EVs), particularly those manufactured in China. Brands like BYD, Geely, and NIO are rapidly gaining popularity, driven by the affordability, efficiency, and technological advancements of Chinese-made EVs. The shift towards eco-friendly transportation aligns with Egypt’s goals of reducing carbon emissions and promoting sustainable growth in the automotive sector.

Mansour Automotive, the official GM dealer in Egypt, is leading efforts to expand local manufacturing, with plans to boost exports to the Gulf Cooperation Council (GCC) and African markets. The company is also exploring opportunities to produce environmentally friendly vehicles that adhere to global environmental standards. Mansour’s expansion is part of a broader trend of increased investment in local automotive manufacturing, aimed at reducing reliance on imports and enhancing Egypt's competitiveness in the international market.

The automotive market in Egypt is also evolving with the rise of digital platforms like Biddex, an online marketplace aiming to digitize the entire car buying and selling process. With a recent $2 million funding injection, Biddex seeks to address longstanding issues in the resale market, such as price transparency and access to financing. This digital transformation is expected to modernize the sector and make automotive transactions more accessible and efficient for consumers.

To attract further investment and deepen local production, the Egyptian government is considering additional incentives for the automotive industry. Plans include establishing an industrial complex in East Port Said, which will feature multiple factories for car body production, painting, and assembly. These initiatives are designed to build a robust manufacturing base that can cater to both local and international markets.

The feasibility study conducted by the European Bank for Reconstruction and Development (EBRD) highlighted that Egypt offers a 17% return on foreign investments in the automotive sector, making it an attractive destination for global automakers.

The developments in Egypt’s automotive sector signal a promising future. The combination of strategic government initiatives, robust private sector involvement, and increasing global interest positions Egypt as a key player in the regional and global automotive markets. As the country continues to invest in local manufacturing, digitalization, and eco-friendly technologies, it is well on its way to becoming a significant automotive hub in the Middle East and Africa.