Egypt Studies New Scrappage Initiative and Investment Incentives for Auto Industry

The Egyptian Cabinet recently convened to review the key features of an executive plan aimed at supporting the automotive industry. The plan was developed following several meetings with manufacturers to identify their needs and proposals for enhancing the flexibility of the national program for developing the automotive sector.

Key Pillars of the Automotive Support Plan

The plan includes seven main axes, notably the continuation of the national program for automotive industry development and the approval to include vehicle exports under the export burden relief program. This move is expected to boost the competitiveness of Egyptian-made vehicles in global markets.

Investment Incentives and Component Manufacturing

The Cabinet tasked the Ministry of Investment and Foreign Trade with activating investment incentives stipulated in Investment Law No. 72 of 2017 for the automotive and feeder industries. It also emphasized promoting local manufacturing of automotive components. Additionally, the inclusion of hybrid vehicles in the national program under environmental compliance incentives is being studied.

Scrappage Initiative for Aging Vehicles

The meeting discussed an economically viable incentive initiative to replace aging taxi and private-use vehicles with new electric cars, based on manufacturers' readiness for implementation. The initiative aims to modernize the aging fleet and reduce harmful emissions.

Support for Feeder Industries

The plan also includes studying the contribution ratio of the Automotive Industry Development Fund in providing cash incentives for feeder industries. This is intended to ease the financial burden of deepening local manufacturing at the parts and components level, thereby increasing the local content ratio in locally assembled vehicles.