Egypt to drive Chinese car production boom with local manufacturing push

Cairo emerging as hub for Chinese automakers, with brands like Geely, MG and Chery investing in local factories to produce affordable cars for domestic and export markets

Tomer Hadar, Calcalist|
Earlier this week, a grand ceremony was held in October City, a suburb of Cairo named to celebrate Egypt’s "victory" over Israel in the 1973 Yom Kippur War, to mark the opening of a new factory by the Chinese automaker Geely. The event was attended by Egyptian Prime Minister Mustafa Madbouly and Geely Global Vice President Song Yun.
The new Geely factory operates as a CKD (completely knocked down) facility, meaning it assembles cars from imported kits supplied by the automaker’s country of origin, utilizing local labor for assembly.
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SAIC officials in Cairo
SAIC officials in Cairo
SAIC officials in Cairo
(Photo: SAIC)
According to reports from Egypt, the factory will produce two models: the Geely Coolray and Geely Emgrand. In its initial years, production will remain relatively modest, with an output of approximately 30,000 cars annually, most of which are expected to serve the local Egyptian market.
While opening a Chinese car factory producing tens of thousands of vehicles annually may seem like a minor development, SAIC—the parent company of MG—announced last month the launch of a local manufacturing plant in Egypt with a $135 million investment. This MG plant, also located in October City, will serve the local market and export vehicles internationally as well.
Another grand ceremony was held in October City In November, attended by Egypt’s Trade and Industry Minister Kamal El-Wazir, marking the inauguration of a factory by EXCEED, a subsidiary of the Chinese automaker Chery.
On October 29, the Chinese automaker BAIC announced a binding agreement to establish an electric vehicle manufacturing plant in the suburbs of Cairo. The agreement was signed in partnership with the Egyptian government and the Egyptian EIM Group. The factory, which will span 1300 square feet, is set to be completed by the end of 2025. By 2026, it is expected to produce 20,000 electric vehicles annually, some of which will be designated for export.
That same month, reports in Egypt revealed that Al Amal Group, the distributor of BYD in Egypt, is working with the government to establish a local BYD factory to manufacture hybrid models.
Historically, Egypt is no stranger to automobile production. With a population exceeding 110 million, Egypt is one of the most populous countries in Africa and is far removed from major car manufacturing hubs in Europe, China, Korea and the U.S. This geographic isolation underscores the necessity of local car production.
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עבד אל-פתאח א-סיסי נשיא מצרים
עבד אל-פתאח א-סיסי נשיא מצרים
President el-Sisi
(Photo: Martin Sylvest / RITZAU SCANPIX / AFP)
Cars were initially imported into Egypt by various colonial powers in the early 20th century, but by 1961, Egypt had established its own automotive industry, which grew out of the country’s long-standing network of vehicle distributors.
Technically, car production in Egypt began in 1961 when the Egyptian government secured a license from Fiat to produce its models locally. After seeing moderate success, the factory began manufacturing unique car models tailored for the Egyptian market, featuring designs better suited for the country’s desert conditions. This process mirrors the development of the Russian Lada, which was born when the Soviet government acquired a Fiat license and adapted its models for harsh Russian winters.
In 1974, following the Yom Kippur War, President Anwar Sadat, eager to announce reforms, introduced a policy known as ODEP, which aimed to open Egypt’s markets to local manufacturing as part of broader economic reforms. This policy led to numerous Western automakers, including Mercedes-Benz, Jeep and General Motors, establishing factories in Egypt. However, the second golden age of Egypt’s automotive industry, which followed its initial boom in the 1960s, came to an abrupt end in 2011 with the fall of the regime of dictator Husni Mubarak.
According to official Chinese government data, 2010 marked a peak year for local car production in Egypt, with 116,683 cars manufactured. For comparison, Israel’s entire car market last year stood at 272,000 vehicles.
However, on January 25, 2011, the Mubarak government fell, prompting many established automakers to immediately sever ties with the Egyptian government and its automotive industry. That year, Nissan announced it would cease production in Egypt, followed by similar announcements from Toyota, Hyundai and Kia. General Motors and Mercedes-Benz declared "temporary suspensions" of their operations. As a result, Egypt’s local automotive industry, which had relied heavily on Western investments, suffered a severe blow.
Within less than six months, Egypt’s automotive industry transitioned from being a hub for Western automakers to a Chinese one. According to statements from the Egyptian government, additional Chinese automakers are planning to establish factories in Egypt. The Egyptian Trade and Industry Ministry shared extensive details about its intentions. According to Kamal El-Wazir: “Local car manufacturing is a key component of President El-Sisi’s declared policy to transform Egypt into a leading industrial hub, particularly in the automotive sector.”
The opening of three car factories by Chinese automakers within weeks of each other represents the realization of a plan unveiled by the Egyptian government in January 2022. This plan aims to position Egypt as the leading manufacturer of affordable vehicles for the African market, and eventually, the global market.
Statistically, most African countries remain far from the global electric vehicle revolution occurring in Europe, the U.S. and China. In reality, the African market is not highly developed, which creates a significant opportunity for Chinese automakers to produce simpler, affordable models that can compete with brands like Toyota and Nissan.
The Egyptian government’s strategic plan was both detailed and ambitious. It promised government grants to local companies with roots in the automotive sector and partnerships with the Egyptian government to establish car factories. The MG factory was built in collaboration with a local company, as was the EXCEED factory.
Back in 2021, even before the official announcement of Egypt’s automotive manufacturing strategy, Prime Minister Madbouly met with representatives of Chinese automakers as part of a preparatory effort to establish these factories. In 2022, the Egyptian government launched the AIDP (Egyptian Automotive Industry Development Program), which has borne fruit over the past three months.
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The next phase of the program, expected to roll out in the coming years, involves offering incentives to Egyptians who purchase locally manufactured electric vehicles. The proposed incentive includes a 50,000 Egyptian pound (about $1000) subsidy and an exemption from annual vehicle registration fees.
The primary difference between Egypt’s "old" and "new" automotive industries lies in their focus. The old industry mainly produced vehicles from Western automakers intended for the local market. In contrast, the new industry, dominated by Chinese automakers, is geared toward exports.
A recent presentation to investors by Al Saeedi Group, one of Egypt’s largest industrial conglomerates involved in telecom, electronics and automotive manufacturing, clearly illustrates the government’s intentions.
According to the presentation, Chinese automakers benefit from an automotive infrastructure that facilitates the transport of their products to African markets and the Suez Canal, six active export ports within a reasonable distance of Cairo, low energy costs subsidized by the Egyptian government and 0% VAT on foreign investments.
In essence, the "deal" offered to Chinese automakers in Egypt is highly advantageous: they begin by manufacturing for the local market, then export older, higher-emission models to Africa, and eventually, once Egypt produces Chinese-made electric vehicles, they can export them to Europe via the Suez Canal.
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