The financial problems faced by Daewoo, the Korean industrial giant whose operations include car manufacturing, and its subsequent restructuring hold a great many lessons for the future of the automotive industry in Egypt, an industry whose very existence is dependent on the assembling of multinational brands. When Corporation filed for bankruptcy over two months ago, the question posited by those working in the market was how this would impact Daewoo's automotive joint venture here. And although Daewoo Egypt has announced that it will continue in the domestic market, this still does not answer the question of how. The answers remain far from clear. What is at stake here is not whether Daewoo will continue its car-making operations in Egypt, but how our automotive industry as a whole will fare in the coming phase.
People working within the automotive industry readily concede that the sector is facing chaos.
And it is a sector in which Egyptian investors have contracted, via joint ventures, to assemble no less than 12 international brands, including GM, Mercedes Benz, BMW, Daewoo and Hyundai. These projects cater to a limited market. Demand does not exceed 65,000 new cars per year, in effect the production capacity of a single factory. The result has been a dissipated pattern of investments, with some ventures producing as few as 300 cars annually. The question to be asked, then, is whether there are any benefits that accrue to the existence of such a high number of assembly factories.