Volkswagen Group Africa has signed an agreement with the Egyptian government to build and operate a new Body Shop and Assembly plant in the East Port Said Automotive Zone (EPAZ).

This decision marks a significant shift from initial plans that had positioned Nigeria as a potential site for the automaker's assembly plant.

The new Volkswagen-Egypt deal comes at a time when the Volkswagen assembly line in Nigeria, operated by Stallion Motors, has been inactive for years.

The Volkswagen showroom in Victoria Island, Lagos, also owned by Stallion Motors, remains largely empty with no new model launches in the local market for several years.

At a recent Nigeria Auto Industry Summit held in Lagos, experts emphasized that the country's automotive sector cannot advance without the implementation of the Nigeria Auto Industry Development Plan, which has been approved by the Federal Executive Council but not yet signed into law.

Daily Trust reports that Nigeria has dilly-dallied over the auto policy Bill for the past 10 years prompting many original equipment manufacturers (OEMs) to jettison their plans to set up assembly plant in Nigeria over absence of a legal framework in the form of auto policy to protect their investment.

Ghana has attracted many OEMs after putting in place its auto policy.

In June 2022, Egypt announced the Automotive Industry Development Programme (AIDP), aiming to increase local value addition, vehicle production, investment, and improve emission standards. The Egyptian government plans to establish a Special Purpose Vehicle (SPV) to construct the Body Shop and Assembly Line buildings, which Volkswagen Group Africa will utilize to assemble vehicles for the Egyptian market, following a successful feasibility study.