M a r k e t N e w s

Africa: The Place Automakers Need to Go After

Posted on : Thursday , 24th December 2015

It may be a bit of a long shot, but African countries like Nigeria could be the final frontier for any automakers looking to cash in on the benefits of globalization and the financial fortitude of emerging markets. Long considered a lost cause due to prolific amounts of poverty, Africans in certain countries have amassed enough wealth that car manufacturers are actually starting to consider the continent’s legitimacy as a contender for future growth.

Sure, Nigeria had a pretty big misstep a couple years back when it first unveiled a slew of incentives designed to attract carmakers but couldn’t deliver on the promised provisions, but at least 36 automakers now have production licenses drawn up in the continent’s biggest economy. According to a report by Bloomberg, companies like Volkswagen, Nissan, and Ford have actually already started making vehicles with local partners, as Nigeria looks to join South Africa for guidance as “the only manufacturing base for the car industry in sub-Saharan Africa, with countries from Ethiopia to Uganda hoping to follow suit.”


“Africa really is the last automotive frontier,” says Mike Whitfield, Nissan’s head of sub-Saharan Africa. “You still have a very un-motorized population.” This presents both challenges and rewards.

According to what Bloomberg has gleaned from the International Organization of Motor Vehicle Manufacturers, vehicle ownership throughout Africa remains extremely low — an estimate of 50 cars per 1,000 people being the norm. But Whitfield says that demand for passenger cars is slowly changing in sub-Saharan Africa, and as road conditions and fuel quality/availability continue to improve, a fresh generation of driver is emerging with a bit more disposable income and a stronger sense of desire driving its spending habits.


As of now, the only sub-Saharan African country that really puts out any sizable automotive production numbers is South Africa, which has relied on government incentives to attract manufacturers. But with the local industry body projecting record automotive exports this year, there’s talk of expanding outside of South Africa. A total of 344,000 units is set to hit 386,100 by the end of 2016, with even more growth projected for the year following if this trend continues.

Naturally, new vehicle sales in sub-Saharan Africa are minuscule by global standards, and while almost all cars purchased outside of South Africa are imports, many of these are second-hand at best. So how will the final Nigerian assembly of light vehicles like Ford’s Ranger affect the local economy if most people still typically buy used cars? According to Anthony Black, an economics professor at the University of Cape Town, fostering a thriving, large scale automotive industry in Africa will first require the reduction of the number of used cars rolling into the region before it can see substantial growth in the development of local manufacturing.

“You need regional integration, you need appropriate policies in the auto sector and you also need to upgrade infrastructure and skills,” Black says. For as sound as this advice may be, it retains a wishful thinking rhetoric that many find promising. Jeff Nemeth, chief executive officer of Ford in sub-Saharan Africa, says that for the first time in history, African nations have a certain level of clout with global automakers. This is undoubtedly due in part to the recently created African Association of Automotive Manufacturers, which coordinates efforts and advises governments on policies in multiple sectors.

“We’ve done this many times in different countries all over the world,” Nemeth said in an interview with Bloomberg. “We’ve seen the good policies and the bad policies, what works well, what works not as well.” While many remain optimistic that companies like Ford will indeed see the automotive industry in Africa grow by at least 40% by 2020, there are other factors to consider if this stab at industrialization is going to work well.

Nigeria isn’t the only African country trying to promote domestic vehicle production. As automakers keep their fingers crossed that this recently forged association will solidify policies and investments in other countries spread throughout the region, there’s still a fair share of doubt. “Everybody can’t have an assembly plant at once,” Nemeth explains. “The idea would be having some kind of pan-African trade arrangement, where maybe we build engines in Uganda but put them in vehicles in Nigeria and then ship the vehicles back to Uganda, duty free.”

You may recall that Nigeria briefly had an energetic automotive industry during the 1970s, which ultimately folded even though it stood a chance of succeeding at the time. This fiasco serves as both a warning and as a source of inspiration for industry leaders in Africa as they look to resurrect a profitable industry from the ashes in an economy that relies on oil for capital gains, a venture that has become increasingly volatile in recent years as crude prices continue to fluctuate. By allowing companies to import two fully-built vehicles at reduced duties of 35% for cars and 20% for commercial offerings, Nigeria hopes its focus on assembly operations will eventually morph into component manufacturing if both momentum and consistent results can be implemented and reproduced.

While this is all exciting news for the industrialization segment, the majority of Africa remains impoverished to the point where even a taxi ride is out of the question. Though a lot of these freshly minted automobiles will likely be shipped to other corners of the globe, and their production is a much welcomed boost to the local economy, unless car sharing programs are in the cards don’t expect a massive number of brand new vehicles to flood the streets of the Nigerian capital of Abuja right away. These things take time, and even though affluence has grown somewhat in Africa, it is going to take some time before automakers see a noticeable spike in sales in the most impoverished continent on the planet.

Source : www.cheatsheet.com
Featured Companies
  • Bajaj Auto
  • Nissens A/S
  • Bajaj Auto
  • Tire Group International, LLC.
  • dubaiexporters.com
  • Steelmate - Think safety think Steelmate

Complete List  

Advertisers in previous issue:

  • Lanfeng machine Co., LTD is a collection of R&D, production and sales of Fuel dispenser and LPG dispenser, gas station equipment of large enterprises in China.
  • Manufacturer of extensive range of clamps, connectors and fasteners.
  • Yellow stone diesel-One of the leading manufacturers of engine parts.
  • Tyre makers.
  • High quality spare parts for truks
  • The Bajaj Group is amongst the top 10 business houses in India. Its footprint stretches over a wide range of industries, spanning automobiles (two-wheelers and three-wheelers), home appliances, lighting, iron and steel, insurance, travel and finance.
  • Dealers of Honda,Yamaha,Suzuki.
  • Leading Dealers,Wholesalers & Retailers Specially For Nissan,Toyota & All Japanese Car Genuine Spare Parts.
  • For European Trucks & Engine Parts.
  • Auto Parts
  • Our corporation is an important motorcycle production base in southern China.
  • Mobile Crushing and Screening plant
  • JNBK Corporation is a trusted leading manufacturer for top quality brakes with a widest range of products covering main applications for Japan, Europe & Americas.
  • We are producing six categories and nearly one thousand kinds and sizes of bias tyre, OTR tyre, radial tyre, Industrial tyre, agricultural tyre and solid tyre.
  • Changzhou Guoshi Vehicle Accessories Co.,Ltd. is proficient in vehicle spare parts manufacturing and has involved a lot of capital, time and resources to make us prominent in this industry.
  • Trade Exhibition
  • Specialized in development, design, manufacture and sale of steel wheel of the truck and trailer and bus,etc.
  • Product includes Braking, Steering, Suspension, Filtration, Transmission, Cooling, Heating, Electrical, Engine, Lubricants, Chemicals, Wiping, Lighting etc.
  • TOTACHI INDUSTRIAL CO. LTD is an esteemed Japanese company that provides a comprehensive range of lubrication products for commercial and consumer applications.
  • Unique Part Trading L.L.C was formed in the year 1984 registered with Dubai Economic Department and Dubai Chamber of Commerce in dealing with the General Trade License to do the Commercial Activities of the Business.
  • Best Choice International Trade is one of the leading tyre exporter in China, and a major supplier of tyres and engines in Beijing Municipality.
  • Nordic Trailers Ltd we pride ourselves on importing and selling world leading car trailers from Respo.
  • Car garage equipment
  • Zhenjiang Huixiang Light&Electrical Co.,Ltd.), which located in Zhenjiang, Jiangsu Province of China, specialize in producing auto&motorcycle bulbs.
  • Fuel Saver
Afrotrade International Marketing, Tel: +971-50-6285684
© 1998-2021 Afrotrade