Egypt is the largest producer of cars in North Africa, with production capacity standing at 180,000 units per year by 2005, although it operates at around 42% of capacity in 2006. Car ownership in Egypt is estimated at around 23 per 1,000 people, compared to 35 per 1,000 in Iran and more than 100 per 1,000 in Saudi Arabia, which means that Egypt has considerable scope for future growth.
The Nazif administration has introduced important reforms to bolster autos parts manufacturers by fully enforcing the implementation of the 2002 Export Promotions Law No. 155 and streamlining the customs drawback system
By the end of the decade, BMW and Nissan will have added a total of 23,000 completely built units (CBUs) per annum to Egypt’s 2004 manufacturing capacity, although it is unlikely that new plants will approach full capacity.
While the tariff structure and exchange rate are now more conducive to automotive industries wishing to export to Egypt, car plant operators are still required to source at least 45% of parts from Egyptian suppliers. Despite strong growth in demand, continued improvement in the quality of Egyptian parts and a supportive investment environment will be crucial to the future of the local automotive industry.
