Nigeria loses out as Volkswagen takes auto assembly plant to Egypt

Volkswagen Group Africa has signed an agreement with the Government of Egypt for the construction and utilisation of the Body Shop and Assembly plant, which will be located within the East Port Said Automotive Zone (EPAZ).

With the new Volkswagen-Egypt deal, Nigeria initially positioned and promised to get the automaker’s assembly plant has lost out.

According to a Transport Day’s report,  the new development is coming at a time that the Volkswagen of Nigeria auto assembly line run by Stallion Motors has remained moribund as there have been no activities for years now.

The Volkswagen showroom located in Victoria Island, Lagos, and owned by Stallion Motors, is virtually empty. And there have been no new Volkswagen model launch in years in the local market.

At a Nigeria Auto Industry Summit held in Lagos last Thursday, many experts and players said the nation’s automotive sector would not grow without the signing into law the Nigeria Auto Industry Development Plan which was already approved by the Federal Executive Council.

The new Volkswagen assembly plant 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.

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 said, “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.”