After many discussions with the Egyptian government, major German car producer Mercedes-Benz announced Jan. 18 it will be a new assembly plant in Egypt. The resumption of operations follows an almost four-year absence from the Egyptian market.
Bearing in mind the surge in local Both and imported car prices in Egypt over the past FEW years due to the devaluation of the Egyptian pound , there is a heated debate Regarding the impact of the move on the local automotive market as well as The Reasons Behind the Egyptian government's eagerness to bring back Mercedes-Benz.
According to the announcement, the passenger car assembly is a local business partner in close collaboration with the Egyptian government.
"Egypt is an attractive and competitive location for production and supporting logistics. With Markus Schäfer, a member of the Divisional Board of Mercedes-Benz Cars, Production and Supply Chain.
In 2014, Mercedes-Benz announced its decision to transfer its investments to Algeria to make the best use of the privileges and incentives the Algerian government offered to the automotive industry. In 2015, the company decided to end production in Egypt on the basis of the reduction of the value of tax in the European Union in 2001 and put into force in 2004.
Under the agreement, the customs value is to beeing reached in January 2019. Although Egypt's Finance Ministry is calling for approval, the EU has rejected the request. As a result, the imported European cars became cheaper than the cars being assembled in Egypt .
"The withdrawal of Mercedes-Benz was highly expected during that period. Such a cuts cuts have a negative economic impact on all companies assembling European cars in Egypt like BMW and Opel, "said Alaa el-Saba, a member of the automotive division in the Cairo Chamber of Commerce and chairperson of Saba Automotive , one of Egypt's major automotive companies.
Saba told Al-Monitor that the Egyptian car market was not greatly helped by the Mercedes-Benz decision. "The Egyptians found another alternative, since this move opened the door for BMW to expand in the Egyptian market during the suspension period. It is worth mentioning that Mercedes did not completely suspend its work in Egypt. It just stopped being local assembly, but Saba said.
Since the suspension of the German company's local assembly process, the Egyptian government spared no effort to get the company to resume operations. In 2017, head of the Suez Canal Mohab Mamish Authority announced that Mercedes-Benz would get a 96,000-square-meter piece of land to set up a new factory in the Suez Canal's industrial zone. He said the government was working "day and night to solve investors' problems."
In further efforts, Egyptian President Abdel Fattah al-Sisi and Schäfer Dec. 6 and stressed Egypt's openness to cooperating with Mercedes-Benz in the context of the country's policy towards expansion in the automotive industry. He also expressed interest in exploring opportunities for cooperation with the German company in manufacturing electric vehicles.
On Jan. 11, Prime Minister Mostafa Madbouly also set out with Schäfer, stressing the country's keenness on providing incentives for foreign direct investment in Egypt. Madbouly pointed out that investment in Egypt provides the advantage of multiple countries of the world.
Two days later, Egypt's Finance Ministry announced that a dispute involving around 700 million Egyptian pounds ($ 39.2 million) has been maintained between the Egyptian Customs Authority and an importer of Mercedes-Benz vehicles.
An official at Mercedes-Benz Egypt, which has been reported to have been reported to the world. He said, "This is the beginning of more positive steps in the manufacturing industry in Egypt, since the big companies can consider Egypt to manufacturing countries in the Gulf countries, besides the African and European countries. with which Egypt has inked trade agreements. "
Regarding the impact of this change, Saba said, but it is hard to say that Egyptian consumers will benefit from the change. He said, "More cars will be affected by the Egypt-EU agreement, including Japanese and Korean manufactured cars in Europe. Nevertheless, it is not possible to exactly predict that it will be produced in 2019 by the country of origin. "
Saba urged the government to offer more incentives to encourage foreign companies to operate in Egypt. "The companies that assembles some of the profits," he concluded.
Found in: egyptian economy, trade, foreign direct investment, germany, manufacturing, automotive industry, cars