CAIRO: Mercedes-Benz Egypt said it would end its car assembling activity in the Egyptian market next May, over fears of a possible decline in profitability in the long-term, according to a statement.
Mercedes-Benz has been operating in Egypt trough a joint project between Daimler AG and the Egyptian German Automotive Company (EGA) since 1997.
Mercedes said its decision came on the back of the Egyptian Customs Authority’s announcement of cutting tariffs imposed on European passenger cars by 10 percent starting 2010 under a partnership agreement with the European Union.
Egypt and the EU signed the agreement in 2001 with the aim of reaching zero tariffs by 2020.
“Consequently, Daimler AG and EGA found that assembling cars in the domestic market is likely to become an unprofitable activity in the long-term,” Mercedes-Benz stated.
At the same time, EGA’s decided to change their business model to assembling cars and producing components for other automotive companies. However, EGA will continue to produce and export brake discs for Daimler AG.
Mercedes-Benz said that Daimler AG has sold its minority stake in EGA to the holding company for Mercedes-Benz authorized distributors in Egypt (NATCO,) while continuing to cooperate in after-sale services.