Abou Ghaly Motors is now in the final stage of negotiations with Chinese automaker Geely to begin producing their cars in Egypt under a long-term contract, Abou Ghaly’s commercial director, Tamer Kotb, told Enterprise. Abou Ghaly is conducting feasibility studies and the two sides are now finalizing details including pricing, volumes, local component usage rates, and what kits to import, he explained. Geely is expected to provide the know-how, technical support, and quality control.

Contracts are expected to be signed by the end of July, with an eye to starting production in August 2023, Kotb added. The cars will be produced at the factories of the Arab Organization for Industrialization’s Arab American Vehicles Company in West Cairo. The company plans to start by producing 4k cars in the first year and grow output by 20% annually until it reaches 7k cars per year, Kotb said.

Abou Ghaly is accelerating the timeline as importing cars to the Egyptian market becomes more difficult, Kotb added. The move also comes amid the state’s local manufacturing push — including the launch of its Egyptian Automotive Industry Development Program (AIDP). The automaker will begin by using 45% local components and gradually increase that percentage with time, he told us.

The local automaker will start with one of Geely’s traditional economy lines before moving into EVs: Abou Ghaly plans to soon shift to manufacturing Geely’s electric vehicles (EVs), but is waiting for local demand to grow and the infrastructure to develop, Kotb explained.

The longer-term strategy is to build a dedicated factory for Geely cars with the aim of making Egypt the Chinese company’s manufacturing hub for MENA and later Europe, Kotb told us. The factory will have the capacity to manufacture 20k cars every year, but a timeline has not yet been set for its launch.

IN OTHER AUTOMOTIVE NEWS-

Some 20k vehicles were delivered in FY2021-2022 in the government’s natgas vehicle replacement strategy, where traditional passenger cars, taxis, and microbuses are replaced by dual-fuel vehicles that run on natural gas, a statement by the Finance Ministry read. The government has received some 39k requests to participate to date in the scheme.

The state has so far spent some EGP 465 mn on the plan and recently added Sharm El Sheikh to the initiative, which now includes Luxor, Aswan, Cairo, Giza, Qalubiya, Alexandria, Port Said, Suez and the Red Sea, the statement read.

The plan was expected to see 250k old cars swapped out with natgas-run cars by the end of 2023, Trade Minister Nevine Gamea said in 2020, but shortages and price hikes for raw materials have caused issues. Companies participating in the program were last month given the greenlight to hike prices by up to 45% in response to rising inflation.