EGYPT – Volkswagen Group Africa (VWGA) has signed a new memorandum of understanding (MoU) with the Egyptian government to develop a feasibility study for constructing 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 collaboratively develop a feasibility study on a shared automotive painting facility.

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.

The agreement underscores the government’s commitment to bolstering its automotive industry. The prior agreement in November 2023 laid the groundwork for the collaborative endeavors.

“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,” VWGA Chairperson, Martina Biene, said.

“The agreement also presents us with the opportunity to progress in our long-term plans to establish our presence in Egypt. 

“Furthermore, Volkswagen is encouraged by the willingness of the government to explore an ingenious approach to realize the viability of the feasibility study. We are fully committed to working with the government of Egypt to make this project viable.”

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 Body Shop and Assembly Line buildings. 

Volkswagen Group Africa has expressed interest in using these facilities to assemble vehicles for the Egyptian market after the feasibility study’s successful completion and its findings confirm viability.

The new Volkswagen-Egypt deal comes when the Volkswagen assembly line in Nigeria, operated by Stallion Motors, has been inactive for years.

The Volkswagen showroom in Victoria Island, Lagos, also owned by Stallion Motors, has remained largely empty, and no new models have been launched in the local market for several years.

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