Mercedes-Benz to open car assembly plant in Egypt

A local business partner will build the car maker's plant

The 93-year-old company is setting up in Egypt. Reuters

Mercedes-Benz, a unit of German automaker Daimler, is planning to open a car assembly plant in Egypt, North Africa's largest economy, to expand its market share in the region.

The passenger car assembly plant will be built by a local business partner and the company is developing its local expansion plans in "close collaboration" with the Egyptian government, Mercedes-Benz said in a statement on Friday.

"Egypt is an attractive and competitive location for production and supporting logistics," Markus Schäfer, member of the divisional board of Mercedes-Benz cars, production and supply chain, said. "With the planned local assembly we are confident to be able to expand our market position."

The plans came after discussions between Mr Schäfer and Egyptian president Abdel Fattah El-Sisi in Cairo and with Prime Minister Mostafa Kemal Madbouly in Berlin. Egypt, Africa's third largest economy, is seeking to attract foreign direct investment and has introduced reforms to stimulate economic growth. The programme is backed by a $12 billion loan from the International Monetary Fund since late 2016 under which Egypt made deep cuts to energy subsidies, introduced new taxes and devalued its currency.

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Mercedes-Benz is also in talks with the Egyptian government to offer its expertise in modern mobility concepts, electro-mobility and electric cars as well as autonomous driving but detailed agreements have not yet been concluded, the company said.

Egypt was ranked as the 40th largest auto producer globally of the 41 countries surveyed covered in the International Organization of Motor Vehicle Manufacturers (OICA) global production statistics report for 2017. The motor vehicle sector is an important contributor to the Egyptian economy, accounting for 3.7 per cent of Egyptian manufacturing output and 1.8 per cent of manufacturing employment annually, according to a 2017 survey from Research and Markets. The automotive industry dates back to the rule of Egyptian leader Gamal Abdel Nasser in the 1950s who founded El Nasr Automotive, the first assembly and manufacturing car company in the country. General Motors set up its first assembly plant in Cairo in 1985.

The country has about 19 companies that manufacture and assemble vehicles cars, buses, transport vehicles with more than 150 companies that are involved in the manufacturing of components. More than 259 factories that supply 70 per cent of all component parts, according to Research and Markets.

Egypt is planning to build a new administrative capital featuring smart cities.

"There have been talks on important state infrastructure projects with the Egyptian government," the company said.

Mercedes-Benz halted its car assembly operations in Egypt in 2015, but in 2017 the company agreed in principle to resume production, state-run newspaper Al-Ahram reported on January 18.

“We welcome the decision of Mercedes-Benz to resume manufacturing and assembly of cars in Egypt, a step that reflects the improvement of the investment environment and the performance of business in Egypt, in the light of the implementation of the comprehensive economic reform program as well as the openness of Egypt to cooperate with the German company within the framework of its policies to develop the automotive industry in its various categories,” Mr El-Sisi said.