By Mohamed Abou El-Fotouh
Following a state of confusion that resulted from rumours that Mercedes-Benz was withdrawing from the market, the German luxury car-maker issued an official statement denying this, stating that they only stopped its assembly services.
The company declared the decision is believed to be in the interest of consumers, as local assembly increases the price of the final product, compared to imported cars. The company is still fully operating in Egypt and will not withdraw, as the Egyptian market is one of its most important markets in the Middle East, according to the statement.
Hamdy Abdel Aziz, Chairman of the Chamber of Engineering Industries in the Federation of Egyptian Industries (FEI), told the press that Mercedes-Benz stopped its assembly process in Egypt due to the unstable government decisions. He condemned the government, saying that it is leading to the failure of the industry and the exiting of investors. A number of federation members said that BMW’s exit from Egypt is expected for the same reasons related to confused government decisions.
The reports were cause for great confusion in the car market, whereby Mercedes-Benz’s decision to stop the assembly process in Egypt was made years ago and was implemented when the customs value made importing a better decision for the market. This is especially true as all company products are made in Germany and are subjected to the GATT agreement approved by Egypt over 10 years ago. The customs value is expected to reach zero in 2019, which assures that mass importing is expected to take place soon and not just assembly, especially in cars of European origin.
As for BMW, the company has products that are completely imported from abroad, especially sedans. The rest of its X-series cars are produced in the US, in the company’s factory, as a result of not being included in the Free Trade Agreement, nor the European Partnership that Egypt has signed, bearing in mind that it did not sign such an agreement with the US. This gives the agency in Egypt a competitive advantage, which encourages it to continue assembling products.
In the same context, the headquarters of the Bavarian Auto Group (BAG), the agents of BMW and Mini in Egypt, published a statement denying the news, and calling for accuracy when it comes to publishing such information, according to Farid El-Toubgy, Board Member and Chairman of BAG, and member of the board of directors at the industrial chamber in FEI.
Further, El-Toubgy declared that they have been present in the Egyptian market for years. Moreover, he said that they have great achievements and ambitions, not only in the Egyptian company but also the German, for which the Egyptian market is so important,
The company’s investments are proof of its ambitions, he said. These investments were implemented to install a full paint line in the factory, according to the best and latest international standards. In addition, during the Automech Formula, the company announced the start of reservations for the X5 model, which is nationally assembled, and that the delivery would start within the next few days.
El-Toubgy added that they completely trust the decisions taken by the Egyptian government. Moreover, the next few days will witness new expansions in the factory, as well as the company.
“We have ambitious plans to produce and assemble all BMW X-series models, which are popular among Egyptian clients, keeping in mind that the productive ability of the factory exceeds 10,000 cars annually,” he said.
Further, El-Toubgy called for accuracy when it comes to releasing these kinds of statements, because they negatively impact Egyptian investments, especially as Egypt needs every new investor in order to develop Egypt.