Toyota snubs Saudi Arabia: Toyota is reportedly backing out of plans to build a car plant in Saudi Arabia, sources close to the matter tell Reuters. “Nobody would say ‘No, full stop’ … but they politely conveyed they’re not interested,” one source is quoted as having said. Saudi Arabia signed an MoU with Toyota back in March 2017 to begin a feasibility study on building an auto factory in the kingdom. The study concluded that Saudi Arabia would need to provide huge subsidies for the project to be viable. “They found that production costs will be similar to other countries only if there is a 50% government incentive. But even then, they aren’t sure it will be profitable,” said one source.

This may not be good for us: The feasibility study was supposed to look at the possibility of sourcing auto parts from Egypt and Turkey as part of an analysis to see whether Toyota could make margins on assembled-in-KSA vehicles more attractive than those on full imports.

Nonetheless, in the fight for FDI regionally, Egypt is looking more attractive to car companies than Saudi: Saudi Arabia’s reforms have failed to entice auto companies to set up shop, with industry insiders noting that other regional countries, such as Egypt, are proving more attractive. “Saudi Arabia and (Gulf) countries have been persistently disappointing in terms of sales in recent years, so it’s not as if original equipment manufacturers would be entering a booming market,” Justin Cox, director of global production at LMC Automotive, tells Reuters. Egypt and Turkey have more advantages for carmakers, he said.

Is now the time for auto companies (including Toyota) to come to Egypt? This week, we reported that the government is studying a new set of incentives that were meant to encourage assemblers to move up the value chain towards manufacturing, while the Trade and Industry Ministry lowered the requirements for locally-sourced car parts to be considered made in Egypt. It was reported back in April 2018 that Toyota and Nissan were waiting on the Automotive Directive (an earlier draft of the incentives program) to decide whether to expand their investments in Egypt. A few months later, the government said it was in talks with Toyota and Volkswagen to open up shop at the Russian Industrial Zone currently being built in the Suez Canal Economic Zone.