Volkswagen Group Africa signs agreement with Egyptian government to build new body shop and assembly plant in East Port Said Automotive Zone
Decision represents departure from initial plans positioning Nigeria as possible location for Volkswagen assembly plant
Volkswagen Group Africa has agreed with the Egyptian government to construct and operate a new Body Shop and Assembly plant in the East Port Said Automotive Zone (EPAZ).
This decision represents a significant departure from initial plans, which had positioned Nigeria as a possible location for the automaker’s assembly plant.
The new Volkswagen-Egypt agreement comes as the Volkswagen assembly line in Nigeria, operated by Stallion Motors, has been inactive for years.
The Volkswagen showroom in Victoria Island, Lagos, which is also owned by Stallion Motors, is largely empty. No new models have been launched in the local market in several years.
At a recent Nigeria Auto Industry Summit in Lagos, experts emphasised that the country’s automotive sector cannot advance without implementing the Nigeria Auto Industry Development Plan, which has been approved by the Federal Executive Council but has yet to be signed into law.
It was reported that Nigeria has been dragging its feet on the auto policy Bill for the past ten years, prompting many original equipment manufacturers (OEMs) to abandon their plans to establish assembly plants in Nigeria due to a lack of a legal framework in the form of an auto policy to protect their investments.
Ghana has attracted many OEMs since implementing its auto policy.
Egypt announced the Automotive Industry Development Programme (AIDP) in June 2022 to increase local value addition, vehicle production, and investment and improve emissions standards. Following a successful feasibility study, the Egyptian government intends to establish a Special Purpose Vehicle (SPV) to construct the Body Shop and Assembly Line buildings for Volkswagen Group Africa to assemble vehicles for the Egyptian market.
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