Business
Africa is the auto industry’s final frontier
When Nigeria first unveiled incentives for carmakers to set up plants its auto industry had ground to a standstill.
Fast forward 2 years, and there are at least 36 automakers with production licenses in the continent’s biggest economy, with Volkswagen, Nissan Motor and Ford Motor already making vehicles with local partners. The country is seeking to join South Africa as the only manufacturing base for the car industry in sub-Saharan Africa, with countries from Ethiopia to Uganda hoping to follow suit.
According to Nissan’s head of sub-Saharan Africa, Mike Whitfield, “Africa really is the last automotive frontier, you still have a very un-motorized population.”
Demand for passenger cars in particular is growing in sub-Saharan Africa, as road conditions and fuel quality improve and young populations with disposable income seek mobility.
For now, new-vehicle sales in sub-Saharan Africa are relatively small by global standards and almost all cars purchased outside South Africa are imports, many of them second hand. While automakers in Nigeria have started final assembly of light vehicles including Ford’s Ranger from imported kits, it is still a long way to full scale manufacturing.
Developing a large-scale automotive industry will require reducing the flood of used cars into the region and developing local manufacturing and supply of components, said Anthony Black, an economics professor at the University of Cape Town.
“You need regional integration, you need appropriate policies in the auto sector and you also need to upgrade infrastructure and skills,” he said.
A group of global automakers recently created an African Association of Automotive Manufacturers to coordinate efforts and advise governments on policies, Jeff Nemeth, the chief executive officer of Ford in sub-Saharan Africa, said in an interview. The group is in talks with Nigeria on how best to attract suppliers of parts to the country, he said.
“We have done this many times in different countries all over the world,” Nemeth said. “We have seen the good policies and the bad policies, what works well, what works not as well.”
