Egypt rolls out red carpet for global carmakers as local assembly push gains momentum

The Egyptian government has signalled its willingness to offer substantial incentives to international vehicle manufacturers willing to set up production lines inside the country, as part of a broader strategy to reshape an automotive sector that has long struggled to move beyond basic assembly work.

Prime Minister Mostafa Madbouly recently told a high-level meeting discussions with several global manufacturers have already reached advanced stages and the immediate priority is to conclude those negotiations and shift towards meaningful, large-scale production.

"We are ready to offer exceptional incentives to any global company willing to localise its manufacturing here," Madbouly said, according to a cabinet statement. While he did not name specific brands or financial details, the remarks underscore a sense of urgency within government ranks to convert talks into tangible factory output.

The prime minister also singled out electric vehicles as a particular focus, aligning with a state-level push to expand clean energy use and reduce reliance on conventional fuels. That emphasis comes as Egypt grapples with rising fuel import bills and seeks to position itself as a manufacturing hub for cheaper, locally assembled EVs targeting both domestic and regional markets.

While Egypt pushes its own agenda, neighbouring Algeria continues to attract Chinese automotive investment. Sokon, a subsidiary of state-owned Dongfeng Motor Group, is building a car and bus assembly plant in the northeastern city of Batna with an annual production capacity of roughly 60 000 vehicles.

Sokon

Sokon becomes the latest Chinese manufacturer to enter Algeria's growing market, taking advantage of a package of incentives introduced three years ago for industrial projects, including tax breaks and affordable land leases. The company said in a statement that it would initially invest around AD8.9-billion (about $67-million) in the Batna project.

The move highlights how North African countries are increasingly competing for a slice of Chinese automotive investment, as manufacturers from the world's largest vehicle market seek to establish regional footholds while navigating trade barriers and shifting global supply chains.

Back in southern Africa, industry leaders are striking a markedly different tone. According to executives from some of South Africa's longest-established automotive manufacturers, 2026 is shaping up as a decisive year for government to show whether it genuinely wants a sustainable automotive manufacturing sector — or whether it must come up with an alternative economic path that generates as many jobs and as much value.

The stakes are considerable. Vehicle and component manufacturing accounts for nearly a quarter of South Africa's manufacturing output, or 22.6%, while the broader automotive manufacturing and retail sector contributes roughly 5.2% to GDP.

More than 115 000 people are directly employed in vehicle and component manufacturing, with 40% of those jobs concentrated in Nelson Mandela Bay, the country's automotive heartland. An estimated 500 000 people work across the sector's wider value chain. Around seven out of every 10 locally manufactured vehicles are exported, contributing nearly 15% of South Africa's total export value.

BAIC facility in the Eastern Cape - now hosting Foton assembly

But original equipment manufacturers are under pressure from multiple directions. Protectionist tariffs from the United States, the transition to new energy vehicles in key markets, rapid advances in manufacturing technology, and the rise of cheaper imports from Asia displacing local sales have all eroded the old certainties.

Domestically, deteriorating conditions around infrastructure, electricity supply, water, basic service delivery, logistics and crime have driven up the cost of doing business, with electricity and fuel prices a particular burden.

The result, according to industry insiders, is a steady erosion of competitiveness, with government industrial policy failing to keep pace with global shifts. Despite rising local sales and export figures, actual automotive production, local content levels and employment are tracking significantly below the targets set out in the SA Automotive Masterplan 2035 — a gap that points to a widening chasm between current industrial reality and the vision laid out in 2021.

Recent months have brought announcements of new and forthcoming automotive investments, primarily from Chinese manufacturers. Chery has purchased the Nissan plant in Rosslyn and expects to roll its first locally made vehicles off the line sometime in 2027, following plant retrofitting and upgrades.

The facility is reportedly set to produce both new energy vehicles and internal combustion engine models, with market speculation pointing to a pick-up aimed at both South Africa and broader African markets.

Foton announced in March that its first overseas manufacturing base, located within the BAIC plant at the Coega Special Economic Zone in Nelson Mandela Bay, has begun completely knocked down production of its Tunland bakkies.

Geely has re-entered the local market, signing up a network of local dealerships and an agreement with China National Building Materials South Africa to support the coordinated development of NEVs, charging infrastructure and localised supply chains. Great Wall Motors is also understood to be weighing options for local manufacturing of an as-yet undecided model, either by sharing or acquiring an existing facility – possibly on a separate line or lines within the Mercedes-Benz plant in KuGompo (formerly East London) in the Eastern Cape.

While the entry of new investors is welcome, industry analysts caution that these projects must be measured against actual local economic value addition and the creation of sustainable local jobs — not just short-term construction work — as well as the surrounding component supplier ecosystem.

There are expectations that these investments should incorporate targeted plans to achieve the 60% local content goal of the SA Automotive Master Plan, along with a balanced supply of fully assembled vehicles for both domestic and export markets.

Perhaps the most telling indicator of South Africa's automotive challenges is the domestic sales tally. In 2015, nine of the top 10 best-selling vehicles in the country were made locally. By 2025, that number had fallen to just five. Of the top 10 best-selling automakers in the domestic market, only four now represent investment in local manufacturing. The rest are importers, most of them sourcing from Indian and Chinese plants.

For an industry that has long prided itself on being a manufacturing success story on a continent where such stories are rare, that trend line is a quiet alarm. Whether government and industry can reverse it before more capacity is lost remains an open question — and one that 2026 may go some way to answering.

Cover image - AI generated

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