The Egyptian government and Volkswagen Group Africa have agreed to construct and operate a new Body Shop and Assembly plant in the East Port Said Automotive Zone (EPAZ).
This decision represents a substantial departure from the original plans, which had proposed Nigeria as a possible location for the carmaker’s assembly plant.
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Why Nigeria has lost its attractiveness to Volkswagen
Stallion Motors’ Volkswagen assembly line in Nigeria has been dormant for years, coinciding with the new Volkswagen-Egypt arrangement.
With no new model introductions in the local market for several years, the Volkswagen dealership in Victoria Island, Lagos—owned by Stallion Motors—remains mostly empty.
Experts at a recent Lagos-based Nigeria Auto Industry Summit stressed the critical need to implement the country’s authorised but unsigned Nigeria Auto Industry Development Plan if the country’s automotive sector is to progress.
Several original equipment manufacturers (OEMs) have scrapped their ambitions to establish an assembly factory in Nigeria due to the lack of a legal framework, specifically an auto policy bill, which has been dragging on for the past decade.
Why Egypt is suitable for Volkswagen
Egypt announced the Automotive Industry Development Programme (AIDP) in June 2022 to raise local value addition, investment, vehicle production, and pollution regulations. Following a successful feasibility assessment, the Egyptian government intends to establish an SPV to construct the facilities that Volkswagen Group Africa would use to assemble automobiles for the Egyptian market. These structures will house the Body Shop and Assembly Line.
Under the new strategic cooperation agreement, the Egyptian government and Volkswagen Group Africa are deepening their partnership to conduct a feasibility study on the potential development and use of the Body Shop and Assembly buildings within the EPAZ.
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In the presence of Egypt’s Prime Minister Dr Mostafa Madbouly, senior officials from various organisations, including the General Authority for the Suez Canal Economic Zone Chairman Waleid Gamal Eldien, the Sovereign Fund of Egypt Chief Executive Officer Ayman Soliman, the East Port-Said Development Company Vice President Dr Ahmed Fikry, and Volkswagen Group Africa (VWGA) Chairperson and Managing Director Martina Biene, they signed a new agreement.
Various dignitaries, including Egyptian Ministers of Electricity and Renewable Energy (Dr Mohamed Shaker El-Markabi), Petroleum and Mineral Resources (Eng. Tarek El-Molla), Planning and Economic Development (Dr Hala El-Saeed), International Cooperation (Dr Rania Al-Mashat), and Trade (European Commissioner Valdis Dombrovskis), were present at the signing ceremony that took place on the first day of the Egypt-EU Investment Conference (29-30 June 2030) in Cairo.
The previous agreement set the stage for joint efforts to further localise the automobile sector in Egypt through a shared facility.
