Egypt’s National Narrative for Economic Development has identified the automotive sector as one of the targeted pillars of the economy, placing particular emphasis on vehicle exports. The narrative intersects with the National Strategy for the Development of the Automotive Industry, which serves as the sector’s executive framework.
However, according to Alaa Al-Sabaa, a member of the Automotive Division of the Federation of Chambers of Commerce, the narrative does not address the problem of weak domestic demand and declining sales, which reached a peak in 2021.
He explained that this is linked to the purchasing power of consumers, as well as the depreciation of the pound against the dollar by nearly 300 per cent, with the exchange rate stabilising between LE48 and LE50 to the dollar.
Household incomes have not risen proportionately, even for the wealthy. Those in higher-income brackets may compensate for the gap in earnings through their savings and returns on assets, but income levels have not kept pace with the depreciation, Al-Sabaa said.
He said that vehicles are not an essential or strategic commodity like fruit and vegetables, and they can therefore be directed towards exports despite weak domestic demand. But he added that the real benchmark for export capability is large-scale production, which reduces the unit cost of locally manufactured vehicles, making them competitive in global markets.
Exports, he argued, are the key to industrialisation in Egypt, since domestic demand alone is insufficient to achieve the scale of production required for a robust automotive industry.
Factories in Egypt have a combined production capacity exceeding 500,000 vehicles if they were to operate at full capacity, he noted. But the challenge lies in expanding the number of factories that manufacture components and securing demand for their output.
This requires reaching agreements with the parent companies that own the brands, since no vehicle can be exported to any market without the approval of the trademark holder, which is also responsible for opening new markets to distributors, Al-Sabaa explained.
These companies possess the production capabilities that allow them to manufacture the same models at a lower cost, in addition to holding the licensing rights governing the use of their brands.
Morocco, he said, now manufactures vehicles for export, and several European brands treat it as a regional hub where their originally European models can be assembled before being re-exported to EU markets.
For this reason, he argued, the key challenge for Egypt, and one that the narrative does not detail sufficiently, is the extent to which the government can employ its diplomatic leverage to engage major global automakers and persuade them to launch large-scale production in Egypt for export purposes.
Another important automotive market that has received little attention is Tunisia, Al-Sabaa said. Tunisia has become a manufacturer and exporter of components rather than of complete vehicles. This suggests that if exporting fully assembled cars proves difficult, Egypt could also focus on component manufacturing, such as filters and certain mechanical parts, in which local capabilities already exist, he added.
Al-Sabaa said that recalibrating priorities at this stage, whether through the National Narrative for Development or any other policy framework, must remain flexible and capable of swift adjustment. Setting short-term targets that allow the sector to build momentum will help steer the industry towards the most viable opportunities, whether in exporting fully assembled vehicles or components, he added.
According to sector sources, Egypt’s engineering industries sector, including automotive, recorded a growth rate of 11 per cent up to September 2025.
This growth is largely due to increased investment in components such as car seats, brakes, filters, and wiring harnesses, which has encouraged foreign investors to begin local vehicle manufacturing. Other reasons include the stability of the exchange rate and the global restructuring of automotive production, with China taking the lead and Europe and Japan witnessing a decline.
Egypt’s exports of vehicles and automotive components reached a value of $891.1 million in the first nine months of 2025, growing by nine per cent compared to $817.4 million during the same period in 2024.
The sector’s main exported products were wiring harnesses, PVC-insulated wiring sets, and vehicles designed to carry 10 passengers or more used for tourism purposes only. Non-electric passenger vehicles are also being exported.
* A version of this article appears in print in the 20 November, 2025 edition of Al-Ahram Weekly
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