Volkswagen Group signs agreement with Egyptian government to develop feasibility study for construction of Body Shop, Assembly Line

Volkswagen Group Africa and the Government of Egypt, have signed a new agreement to develop a feasibility study on a shared automotive painting facility within the East Port Said Industrial Zone in the East Port Said Automotive Zone (EPAZ) in Cairo.

Fresh Angle International, understands that the agreement is to build upon the progress and mutual understanding achieved under the agreement signed in November 2023.

In the new strategic co-operation agreement, Volkswagen Group Africa and the Government of Egypt, would broaden their collaboration, to develop a feasibility study for the construction and utilisation of the Body Shop and Assembly buildings, which will be located within the EPAZ. 

The new agreement was signed by the 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, Vice President of the East Port-Said Development Company; Dr Ahmed Fikry and Chairperson and Managing Director of Volkswagen Group Africa (VWGA), Martina Biene 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 prior agreement laid the groundwork for the collaborative endeavours aimed at deepening the localisation of the automotive industry in Egypt through a shared facility. This underscored the commitment of the Government of Egypt to bolster its automotive industry. In June 2022, the Government of Egypt announced the introduction of the Automotive Industry Development Programme (AIDP), which aims to foster the local value addition, increase vehicle production volume, boost and attract investment, and improve emission standards in the automotive sector.

The Government of Egypt 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.

Biene commented: “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 Volkswagen Group Africa with the opportunity to progress its long-term plans to establish its presence in Egypt. Furthermore, Volkswagen is emboldened by the willingness of the Government of Egypt 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.”

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