In a new strategic cooperation agreement, Volkswagen Group Africa (VWA) and the government of Egypt will conduct a feasibility study on the construction of a body shop and assembly buildings, which will be located within the East Port Said Automotive Zone (EPAZ) in Cairo.

This agreement builds on the mutual understanding achieved between the parties in November to develop a similar study on a shared automotive painting facility within the EPAZ.

“The prior agreement laid the groundwork for the collaborative endeavours aimed at deepening the localisation of the automotive industry in Egypt through a shared facility,” says VWA.

“This underscored the commitment of the government of Egypt to bolster its automotive industry.

“In June 2022, the government of Egypt announced the introduction of the Automotive Industry Development Programme, which aims to foster the local value addition, increase vehicle production volume, boost and attract investment, and improve emission standards in the automotive sector.”

The Egyptian government aims to establish a special-purpose vehicle to build the buildings for the body shop and assembly line.

VWA has expressed interest in using these facilities to assemble vehicles for the Egyptian market, following the positive completion of the feasibility study.

“The new strategic cooperation agreement with the government of Egypt offers VWA an asset-light investment model, which shifts the investment focus from capital expenditure to operational expenditure,” says VWA MD Martina Biene.

“The agreement also presents VWA with the opportunity to progress its long-term plans to establish its presence in Egypt.

“Furthermore, Volkswagen is emboldened by the willingness of the government of Egypt to explore an ingenious approach to realise the viability of the feasibility study. We are fully committed to working with the government of Egypt to make this project viable.”