Comes in the wake of an expected reduction in the country's import tariff

Daimler plans to pull out from its Egyptian vehicle assembly joint venture, reports the Egypt Independent. The move comes in the wake of an expected reduction in the country's import tariff which will make it easier for the automaker to import vehicles to Egypt than to assemble locally. Daimler owns a 26% equity stake in Egyptian German Automotive Company (EGA) but plans to pull out of the venture next month, said the report. Another report by Europe Online added that the move has been confirmed by Daimler. At its Cairo plant, EGA assembles Mercedes-Benz's S-, C-, and E-Class range along with the GLK sport utility vehicle (SUV).

Significance: According to IHS Automotive production forecasts, the venture had an assembly volume of close to 2,700 units in 2014, including nearly 400 units for Chinese automaker SAIC. As this assembly volume is evidently very low, it probably makes more economic sense for Daimler to import the vehicles from Europe. Under the Egyptian-European partnership agreement, customs duty on European cars will be phased out in four years. Meanwhile, Hamdy Abdel Aziz, chairman of the Chamber of Engineering Industries at the Federation of Egyptian Industries blamed the government's policies for Daimler's exit.

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