Automotive industry in Egypt

The automotive industry in Egypt has been developing for 50 years. It can sell more than 200,000 vehicles annually and is now the second-largest market in Africa and the 42nd largest in the world, with an annual production output of over 70,000 vehicles. After experiencing many failures and success, the Egyptian Automotive industry is focusing more on assembly operations rather than manufacturing.[1]

## Evolution of the automotive industry

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### 1960s

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The automotive industry in Egypt started in 1961, when the Egypt government founded the first automobile company called EI Nasr Automotive Manufacturing Company.[2] It was the first Arab vehicle manufacturer and it was state-owned.[2] The company mainly produced Fiat-based vehicles due to engineering and design problems and the company also assembled foreign licensed cars under its brand.[2] After years of development, they came up with their own products, such as Nasr 128 GLS, which was the best-selling model at that time.[2]

### The Open-Door Policy

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In 1974, President Sadat of Egypt initiated an Open Door Economic Policy (ODEP). Many foreign companies and capital entered the Egyptian automotive market in the 1980s. In 1985, General Motors (GM) started a joint venture with Al-Mansour Automotive Company which was a local importer and car dealer in Egypt.[3] At the beginning of the 1990s, the Egyptian government adopted the Economic Reform and Structural Adjustment Program (ERSAP),[1] which attracted many foreign companies which entered the Egyptian market to build their factories and assembly lines.[1] There were many big companies such as Citroen, Fiat, Hyundai, Mercedes-Benz, Nissan, BMW and so on.

### January 25 revolution

[edit]

The Arab Spring

In 2010, vehicle production peaked at 116,683. It was the best year performance-wise for the Egyptian automotive industry.[4] However, the Egyptian revolution of 2011, also known as the January 25 revolution,[5] which deposed former president Hosni Mubarak, caused significant harm to the industry. Nissan suspended its production in Egypt for safety reasons after anti-government protests started,[6] Toyota stopped their SUV assembly line in Egypt due to the situation,[6] many Korean companies such as Samsung, LG, and Hyundai Motors had to give up their business in Egypt due to the country-wide protests and many employees were forced to return to Korea or a different country,[6] BMW returned German nationals to Germany because of the violent demonstrations, and other automotive manufacturers like Daimler AG and General Motors had temporarily suspended operations in Egypt.[7] Due to the political changes, the production rate went down 30% in 2011 and remained down for the next few years.[8] The total car production in 2017 was only 36,640.[9]

## Domestic automotive industry

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The automotive industry is one of the most important industries in Egypt and brings many benefits for the economy. In the 1980s, EI Nasr Automotive Manufacturing Company was the only giant manufacturer in the entire Egyptian market. There are now 83 car manufacturers in Egypt.[10] It has giants like GM, BMW, Hyundai, Toyota and Nissan, which produce some of their vehicles in Egyptian factories. There are more than 15 car assembly plants and 75 facilities in the country providing more than 75,000 job opportunities.[11] Egypt has the capacity to produce 300,000 passenger cars, light commercial vehicles, trucks, and buses per year.[11] It is an under-penetrated automobile market with large numbers of the young population. The demand is increasing every year and has big potential.[11] Only an average of 35 Egyptians out of 1000 own a car.[11] The number in Algeria, for reference, is 130 out of 1000 which is about four times larger than Egypt.[11]

However, the Egyptian pound's recent devaluation caused a negative impact for imports of cars and their parts.[11] It made the assembly components more expensive and caused a substantial impact on the vehicles' selling price and the cost of production and assembly.[11] It is difficult for domestic producers to compete with European exporters and large-scale Asian manufacturers due to the small market.[11] At the end, the existing assemblers will look for companies that have high sale volumes in the country.[11]

The Egypt government has signed the Tripartite Free Trade Agreement which allows free trade in 26 countries of the Common Market for Eastern and Southern Africa(COMESA).[11] It provides opportunities for Egyptian exports. The economy of Africa is increasing and the car demand is booming across the board.[11]

## Car manufacturers in Egypt

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1\. Al Fotouh Car Assembly Company [citation needed]

2\. Arab American Vehicles

A joint venture between the Arab Organization for Industrialization (51%) and Chrysler Group LLC (49%). Producing military and civilian vehicles.[citation needed]

3\. Arab Organization for Industrialization

A company which was established in 1975 by Egypt, Saudi Arabia, the UAE and Qatar and specializes in manufacturing different products, among them are cars like the Toyota Fortuner. It is currently fully owned by the Egyptian government. [12]

4\. El-Tramco

5\. General Motors Egypt S.A.E

A joint venture between car giant General Motors International, and the local importer and car dealer Al-Mansour Automotive Company. The factory is located in the 6th of October City.[13]

6\. Ghabbour Group

Founded in 1940, Ghabbour Group is the largest car manufacturer in Egypt producing 150,000 units annually. The company manufactures cars for Bajaj Auto, Hyundai and Volvo.[citation needed]

7\. JAC Motor

JAC Motor is a state-owned car manufacturer. The company was founded in 1964 and was listed on the Shanghai Stock Exchange in 2001.[citation needed]

8\. Mercedes Egypt

Established as a wholly owned subsidiary of Daimler AG in December 1999.[14] Assembling for the Mercedes Benz vehicles.

9\. Suzuki Egypt

Assembles for Suzuki passenger vehicles.[citation needed]

The Suzuki 800

10\. Wagih Abaza Company

Assembles the Peugeot 405.[citation needed]

11\. The Bavarian Auto Group

Manufactures and sells BMW vehicles. It was founded by BMW in March 2003 and is located in the 6th of October City. As of 2022 it is defunct, and has been replaced with Global Auto Group[citation needed]

12\. Speranza Motors, Ltd

An Egyptian auto manufacturer based in Maadi, Cairo It is a part of Daewoo Motor Egypt (DME) which itself belongs to the Aboul Fotouh Group. The factory is located in the 6th October City.[citation needed]

13\. The Seoudi Group

An Egyptian automobile manufacturer which was founded in 1975.[citation needed] The company manufactures Nissan Vehicles located in the Thai Trade Center[citation needed]

14\. Egyptian German Automotive Company

An Egyptian car assembler, which was founded by former Daimler-Benz CEO and Samy Saad as a joint venture to assemble vehicles of the Mercedes-Benz brand.[citation needed] It is located in the 6th October City assembling Mercedes Benz vehicles.[citation needed]

15\. El Nasr Automotive Manufacturing Company

It was the first Arab vehicle manufacturer and it was state-owned.[2] The company mainly produced the Fiat-based vehicle due to the engineering and designed problems and the company also assembled foreign licensed cars under its brand.[2]

16\. MCV Bus and Coach

A bus bodies manufacturer, founded in 2002.[citation needed]

17\. Egy-Tech Engineering

A three-wheeled vehicles manufacturer.[citation needed]

18\. Manufacturing Commercial Vehicles

An Egyptian company manufacturing buses and trucks. The factory is located in Salheya.[citation needed]

19\. Gorika Egypt

20\. Nissan Motor Egypt [15]

## Egypt automotive market

[edit]

The Egyptian automotive market is now focusing on the customer experience and provides many opportunities for some parts.[16] Geographical diversification model is one of the most important strategies for automobile manufacturers to stay competitive and profitable.[16] All the giant companies in Egypt are focusing on self driving technology.[16] The government encourages the development of the automotive industry.[16] However, it is expensive to invest in environmental pollution regulation.[16]

### Production

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As a country with over 100 million people, the production, which only averages less than 10,000 per year is unable to keep up with the demand. The production in South Africa is ten times larger than in Egypt and the production in Morocco is five times larger than in Egypt.[8] In 2002, the total number of the production of cars in Egypt was 45,073.[17] In 2010, sales increased to 116,683, which was the best year in Egyptian automotive production.[4] However, due to political changes (January 25 revolution), the production went down 30% in 2011.[8] The total production as of 2017 is only 36,640.[9] But the government has strong confidence to boost the car industry in 2018. And the market has given its feedback which the total production number of vehicles go up 90%.

### Automotive sales

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The sales in the Egyptian market increased 40% in the first half of 2018 compared to the half of 2017.[18] The best-selling year in the Egyptian automotive industry was 2015, in which 349,100 new vehicles were sold.[19] And the total sales of vehicles in 2005 was 121,437, which was the worst-selling year.[19] Compared to the other two major countries (South Africa and Morocco) in Africa, Egypt comes in second place in sales only behind South Africa and followed by Morocco and the sales market still has the capacity to growth due to the large population.

In 2017, Chevrolet was the best-selling brand in Egypt, accounting for 22.3% of the automotive market. Chevrolet sold 21,468 cars, which was a 34.7% decrease in its sales compared to 2016 which saw the sales of 32,890 cars.[20] Nissan was ranked number two, with 15,847 sold vehicles in the first nine months of 2017. It was 16.5% of total marketing sales.[20] Hyundai won third place with 14.1% of total marketing sales and sold 13,613 vehicles.[20] Toyota came next, with 7,930 sold cars and won 8.2% of market share.[20] Mitsubishi was in fifth place with 5% of total sales during 2017 and sold 4,804 cars. Chery came in next at sixth position with 4.6% of the market share and sold 4,419 vehicles.[20]

## References

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1. ^ a b c Zaher, Shadwa. "Automotive industry in Egypt". `{{cite journal}}`: Cite journal requires `|journal=` (help)
2. ^ a b c d e f "Comeback car". Al Ahram Weekly. Retrieved 2019-05-12.
3. ^ "Chevrolet Media - Egypt - Company Information". media.gm.com. Archived from the original on 2020-09-21. Retrieved 2019-05-12.
4. ^ a b "2010 Statistics | OICA". www.oica.net. Retrieved 2019-05-12.
5. ^ "Egypt Uprising of 2011". Encyclopedia Britannica. Retrieved 2019-06-07.
6. ^ a b c "Signing into eresources, The University of Sydney Library". login.ezproxy1.library.usyd.edu.au. Retrieved 2019-05-12.
7. ^ "Signing into eresources, The University of Sydney Library". login.ezproxy1.library.usyd.edu.au. Retrieved 2019-05-12.
8. ^ a b c "2011 statistics | OICA". www.oica.net. Retrieved 2019-05-12.
9. ^ a b "2017 Statistics | OICA". www.oica.net. Retrieved 2019-05-12.
10. ^ "Automotive - Car-Manufacturer". www.egypt-business.com. Retrieved 2019-05-12.
11. ^ a b c d e f g h i j k "Egypt's domestic automotive industry shows promise". Oxford Business Group. 2016-01-27. Retrieved 2019-05-12.
12. ^ "Arab Organization for Industrialization". 6 February 2015.
13. ^ "Our Businesses". Mansour Group. Retrieved 2020-11-07.
14. ^ "Company Overview | Mercedes-Benz Dubai". mercedesbenzme.com. Retrieved 2019-06-07.
15. ^ "Our Businesses". Nissan Motor Egypt. Retrieved 2022-03-10.
16. ^ a b c d e "2019 Future of Egypt Automobile Market - Trends, Outlook and Growth Opportunities - ResearchAndMarkets.com". www.businesswire.com. 2019-02-08. Retrieved 2019-06-07.
17. ^ "2002 Statistics | OICA". www.oica.net. Retrieved 2019-05-12.
18. ^ "Egyptian auto market to keep growth rate at around 40%". EgyptToday. 7 October 2018. Retrieved 2019-06-07.
19. ^ a b "Sales Statistics | OICA". www.oica.net. Retrieved 2019-05-12.
20. ^ a b c d e "Chevrolet remains top-selling brand with 22.3% of market". www.egypt-business.com (in German). Retrieved 2019-05-12.

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Automotive industry in Egypt

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