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Global car makers expand Egyptian operations

Egypt car makers Reuters
Of all the Sunnys made in Egypt, 40% are exported, a figure the company wants to see increase
  • Stellantis to add new model in 2025
  • Devaluation makes country more attractive
  • Nissan plans new model for Egypt

Car makers in Egypt are expanding their operations after the conclusion of a long-running currency crisis earlier this year.

The devaluation of the Egyptian pound in March has made the country a more attractive proposition both as a consumer market and a base from which to export.

Among those who have announced expansion plans since then is the Japanese car manufacturer Nissan, which already produces the Sunny in Egypt. 

Around 60 percent of Sunnys produced in Egypt are sold on the local market, with the remainder exported to other markets in the region. In the past two years, Nissan has exported more than 15,000 units from the North African country.

Mohamed AbdelSamad, managing director of Nissan Egypt, said that the company wants to double down on the country as a base from which to serve the rest of the African continent with passenger vehicles. 

By the end of the year, Nissan will announce a new model for manufacture in Egypt. It is also investing in its factory in Sixth of October City, on the outskirts of Cairo, for it to become the first in the country run entirely on solar power.

Car makers like Nissan can tap into a large workforce in Egypt. Photo: Nissan Egypt

One of Egypt’s greatest assets is its location. “You have access to Africa, to Europe, Asia and the GCC,” AbdelSamad said.

Egypt’s growing population of more than 106 million people means manufacturers can tap into a large workforce. The country also has a much lower cost of living thank its Mena neighbours.

Local suppliers available to automobile manufacturers are “not top notch level,” AbdelSamad said, though he believes they are improving and growing steadily.

In recent months, the Egyptian government has announced support for the growth of local manufacturers through initiatives including plans for three new factories for the production of automobile parts, at a cost of $1.4 billion. 

“We have evidence that local manufacturing will really be feasible and be supported,” AbdelSamad said.

Stellantis, the multinational car manufacturer formed in 2021 through the merger of Fiat Chrysler and Peugeot, which has its HQ in the Netherlands, announced plans in September to begin assembling Jeep Grand Cherokees in Egypt.

Samir Cherfan, chief operating officer of Stellantis in the Middle East and Africa region, said that the company will announce a second model in the first half of 2025 and is looking at plans for a third.

Stellantis plans to assemble Jeep Grand Cherokees in Egypt. Photo: Stellantis

Cherfan said that the new investments have only been made possible by the currency devaluation. “It’s not that two years back I didn’t want to produce in Egypt,” he said. “I did it as fast as I could.”

He said that Stellantis hopes to become a market leader there, eventually producing around 45,000 units a year over several models. Like Nissan, he hopes that many of these units will go for export. However, Cherfan said, he worries about the potential disappearance of export subsidies because of government budget cuts.

“Egypt is a great country with great resources that should give good odds for the future,” Cherfan said, “but the current context is very tough.”

Despite its natural advantages, the risk of another currency crisis may make investors pause. The limitations of local suppliers mean that manufacturing costs in Egypt are higher than more established manufacturing economies such as Turkey and Morocco where, Cherfan said, it is possible to “produce at Chinese cost”. 

Nevertheless, Cherfan believes that with a period of stability and development within the manufacturing sector, Egypt will be able to compete with Morocco and Turkey on cost. “We believe in the country,” he said.

“We will invest, we will develop the automotive supplier base. and we will do that in a scalable way. Current conditions are ok, as long as they are ok we will continue to scale up.”

The risk of a return to crisis hangs over investors but, Cherfan said, “I’m working in a region which is a rollercoaster.

“There is no way of operating without risks. It’s inherent to the region in which we operate.”