Slide of the month (SOTM) December. Opportunities in the automotive manufacturing sector in Africa

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As the Africa intelligence partner for Automechanika Dubai 2022, we shared different insights during the AfriConnections session: Future opportunities in a changing African automotive aftermarket.

One of the slides from our presentation shed light on the automotive manufacturing sector. 20 years ago, South Africa was the only notable vehicle producer in Africa. Since then, Morocco has made tremendous progress and produced around 400,000 vehicles in 2021. Egypt has become more active as well, and countries in sub-Saharan Africa, such as Kenya and Ghana, are gearing up to become the next growth frontiers of the industry. With Africa’s vehicle fleet predicted to grow substantially over the next decades, the sector presents vast prospects for international firms.
We shared in-depth data and recommendations in the panel to help international firms in their Africa strategy. Get in touch if you want to speak more about opportunities for your company in Africa´s automotive markets.

Read previous SOTMs (Slides of the month) here

Slide of the month (SOTM) November. Number of trade fairs in Africa

Slide of the month (SOTM) September. Agricultural exports from Africa

Slide of the month (SOTM) August. Beer production in Africa

Slide of the month (SOTM) July. The growth of consumer markets in Africa

Slide of the month (SOTM) June. Blood transfusion landscape in Tanzania

 

Slide of the month (SOTM) October. Automotive battery markets in Africa

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Africa’s automotive markets present significant opportunities for international companies. The COVID-19 pandemic negatively affected the market as it interrupted supply chains after governments set up travel restrictions.

Over the last decade, africon has implemented numerous projects in the automotive sector. Some of our clients have tasked us with analyzing the battery markets for commercial and personal vehicles. From our latest data, South Africa is the largest single market for automotive batteries, but sub-Saharan Africa (SSA) also presents a sizeable opportunity. The average automotive battery imports per year were USD 135 million for North Africa, USD 188 million for SSA, and USD 93 million for South Africa. These figures are average imports from 2019 to 2021. The leading suppliers were France, Spain, China, Germany, Turkey, and Korea. It is also worth noting that a few local automotive battery manufacturers exist in Kenya and South Africa.

africon provides automotive clients with comprehensive market overviews and helps them to identify and access opportunities in new application areas or product segments. We also give practical recommendations on penetrating the market.

Read previous SOTMs (Slides of the month) here

Slide of the month (SOTM) September. Agricultural exports from Africa

Slide of the month (SOTM) August. Beer production in Africa

Slide of the month (SOTM) July. The growth of consumer markets in Africa

Slide of the month (SOTM) June. Blood transfusion landscape in Tanzania

Slide of the month (SOTM) May. Construction projects in Africa

 

Slide of the month (SOTM) February. Vehicles in operation in East African countries

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Vehicles in operation in East African countries

Africa’s automotive market contains excellent opportunities for international companies.

africon recently completed a project for a producer of automotive and industrial components. A key question to gauge the market size for the client was the size of vehicle fleets (vehicles in operation/ VIO) in East Africa. In East Africa, Kenya had the largest vehicle fleet with 1.8 m vehicles in operation.

africon provided the client with a comprehensive overview of the market and clear recommendations on utilizing opportunities locally.

Read previous SOTMs (Slides of the month) here.

Slide of the month (SOTM) January. Estimated number of converters in select countries in Africa

Slide of the month (SOTM) December. The dairy industry in Ghana

Slide of the month (SOTM) November. Government health care expenditure in East Africa

Slide of the month (SOTM) October. The printing industry in West Africa

Slide of the month (SOTM) September. The Nigerian rail industry

 

Slide of the month (SOTM) August. The Nigerian automotive industry

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The Nigerian automotive industry stands out compared to other African automotive industries – in almost every way, sometimes positively, sometimes negatively. The country is home to one of the largest vehicle parks on the continent with nearly 12 million units – around six times Kenya’s fleet. On the other hand, the country’s automotive industry is, in large parts, significantly more informal than that of peers such as South Africa and Egypt. This circumstance makes it a very challenging place to do business for many international automotive firms. However, the potential rewards for those succeeding in it are enormous.

We have completed many private sector projects in this space, including the latest one for a large multilateral organization. africon interviewed executives from more than 60 companies and conducted multiple surveys locally to identify funding/ engagement opportunities for the client.

Local manufacturing of both vehicles and components in Nigeria is presently in many areas complicated due to insufficient or poorly implemented regulation. However, some segments of the industry enjoy more favorable conditions, allowing for growing local manufacturing activity. The deciding factor is most often protection from cheap imports. Luckily, large parts of the market want a “natural” level of protection: neither domestic parts trade nor various workshops and digital services can effectively be imported. In most cases, local firms reap significant benefits, while international investors often perceive the risk to be too high.

Ultimately, africon presented a list and assessments of approximately 20 expansion projects in Nigeria, with which the client can engage to promote industry growth, job creation, and development. These projects include both local and international firms, early-stage ideas up until ready-to-invest undertakings. We hope to see many of these grow into shining examples of effectively utilized opportunities in Nigeria soon.

If you have any questions or concerns, you can contact us at info@africon.de

Read previous SOTMs (Slides of the month) here.

Slide of the month (SOTM) July. The age of vehicles in operation in Nigeria

Slide of the month (SOTM) June. Labtech imports in East Africa

Slide of the month (SOTM) May: The logistics sector in Rwanda and Ethiopia

Slide of the month (SOTM) April. Overview of the tech scene in select countries in Africa

Slide of the month (SOTM) March. Operational and upcoming railway lines in Nigeria

 

 

Slide of the month (SOTM) July. The age of vehicles in operation in Nigeria

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While Africa’s automotive market contains great opportunities, numerous international automotive firms face challenges when doing business on the continent. A key reason is the very significant differences in the business environments in Africa, vis-à-vis those in other global markets.

africon recently completed a project on the Nigeria automotive industry, commissioned by a multilateral organization. A critical question that emerged was the age of vehicles in Nigeria. As many large component producers do not provide coverage for cars beyond a certain age, this metric is a crucial market determinant for many international companies. With an average age of 16 years, a large portion of the Nigerian vehicle fleet is “too old.” This highlights the need for holistic data on African markets to sufficiently understand market potentials.

After putting these market forces into consideration, africon provided the client with a comprehensive overview of the market and a list of potential opportunities locally.

If you have any questions or concerns, you can contact us at info@africon.de

Read previous SOTMs (Slides of the month) here.

Slide of the month (SOTM) June. Labtech imports in East Africa

Slide of the month (SOTM) May: The logistics sector in Rwanda and Ethiopia

Slide of the month (SOTM) April. Overview of the tech scene in select countries in Africa

Slide of the month (SOTM) March. Operational and upcoming railway lines in Nigeria

Slide of the month (SOTM) February. Import statistics of medical equipment in East African Community (EAC)

Slide of the month (SOTM) January. The market for commercial vehicles in Kenya

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Over the last couple of years, africon has implemented a vast range of projects in the automotive sector. Some of the projects have tasked us with analyzing the market for automotive components like filters and spark plugs, among others, for commercial and personal vehicles. We have conducted more than a hundred interviews with senior level industry players, parts distributors and automobile traders in different countries in Africa.

In East Africa, Kenya has been the automotive hub. In the last two and a half years, approximately 33,000 commercial vehicles have been sold in the country. Light- medium trucks are the leading segment in commercial vehicles, accounting for almost 11,000-unit sales over the past 2.5 years. Even though sales have been affected by the coronavirus pandemic, the industry shows positive signs of recovery. Kenya’s commercial vehicle assemblers might have even increased their output in 2020 compared to the previous year. Additionally, the government and stakeholders are still working on positive automotive policy adjustments. The sector in Kenya has space for significant growth, opening interesting opportunities for international firms.

In the project here, africon was able to provide market transparency, in-depth data and strategic recommendations for future sales efforts in the region.

Get in touch if you would like to know more about opportunities in Africa´s automotive markets.

Read other related SOTMs

Slide of the month (SOTM) October. Automotive industry in sub-Saharan Africa

Slide of the month (SOTM) June. Automotive Kenya vs. Nigeria

Read previous SOTMs (Slides of the month) here.

Slide of the month (SOTM) December. The food, beverage and tobacco manufacturing industry in Nigeria

Slide of the month (SOTM) November. The construction industry in Africa

Slide of the month (SOTM) October. The meat & fish sector in Nigeria

Slide of the month (SOTM) September. The soft drinks market in Kenya

Slide of the month (SOTM) August. Steel demand in Africa

 

Slide of the month (SOTM) July. The future of Africa’s independent automotive aftermarkets

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africon recently presented at Messe Frankfurt Middle East: Automechanika Dubai’s webinar titled “Africa’s independent aftermarket (IAM) – a look at the current situation and future potential”.

In a webinar poll, they asked the 237 attendees from 65 countries if the African automotive aftermarkets will play an important role for their business in a post-COVID future. In total, more than 70% of the participants “strongly agreed” or “agreed”. The poll results show that there is indeed a significant interest in Africa. africon strongly believes in the African continent and with our role of bridging potentials, we are continuing to help reduce cost, risk and time for IAM companies.

The webinar is currently available on-demand for people to watch.

If you have any questions. Do not hesitate to contact us.

Read other SOTMs (Slides of the month) here.

Slide of the month (SOTM) June. Consumer goods across Africa

Slide of the month (SOTM) May. Glass production in Africa

Slide of the month (SOTM) April. The sugar industry in East Africa

Slide of the month (SOTM) March. The rope manufacturing industry in Africa

Slide of the month (SOTM) February. Obtaining finance in Côte d’Ivoire

 

 

Slide of the month (SOTM) December. Automotive market in Uganda

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The automotive aftermarket is one of the key sectors of opportunities in Africa – not just for Germany, but for many global automotive nations as well. However, many international automotive firms face challenges when doing business in Africa as markets function differently compared to other parts of the world – and within Africa itself. The typical route to market is one example: while consumers in markets like Nigeria tend to buy parts from retailers, consumers in some East African countries – like Uganda here – tend to go for the more convenient option of buying from workshops directly. This changes dynamics in decision making, of which automotive suppliers need to be aware to efficiently position their brands in the market.  

Slide of the month (SOTM) May. The aftermarket for commercial vehicles in South Africa

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Being Africa´s most developed country, the automotive aftermarket in South Africa presents itself with its unique profile, own challenges and opportunities: South Africa is one of the very few African countries with a relatively strong base of local automotive parts manufacturers. A vast variety of international brands have long set up shop, some established their own offices and warehouses. The local motor vehicle fleet of more than ten million is one of Africa´s biggest but has recently only grown very slowly. Together with a sluggish economy, the parts market has become relatively competitive with firms fighting hard for market shares.

The already existing volumes, together with a market that – in a global comparison – still has space for significant growth, open interesting opportunities for international firms.

Get in touch if you would like to know more about opportunities in Africa´s automotive aftermarkets!

Automotive parts import Sub-Saharan Africa.

Slide of the month (SOTM) February. Automotive parts imports in sub-Saharan Africa

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Automotive parts import Sub-Saharan Africa.

Let us look at the automotive market in sub-Saharan Africa narrowing down to the aggregate value of three main automotive service parts which are: Filters (consisting of air filters for internal combustion engines, as well as Oil or petrol filters for internal combustion engines), Spark plugs, and Brake parts. The total combined import value of these automotive parts in sub-Saharan Africa was $753 million in year 2017. Brake parts recorded the highest import value worth $388 million which is 52% of the total import value of the three selected automotive parts combined, while spark plugs were the least of the imports valued at $58 million.

Based on our analysis of the available data on automotive parts imports in sub-Saharan Africa, we found that South Africa, Nigeria, Angola, Kenya, and Ghana were the top five importers of filters, spark plugs and brake plugs into sub-Saharan Africa in the year 2017. South Africa being the largest market, accounted for 47% of these automotive parts imports worth $355 million, while Ghana being the fifth largest market was worth $21 million.

The major export partners were China, Germany, South Africa, Belgium and USA. However, the data from year 2007 shows that Germany was the largest exporter of these automotive parts to the Sub Saharan Africa region until 2013 when China took over as the largest exporter to the region. Brake parts were also the largest exports (of the three parts) from China and Germany while Filters were the largest exports from South Africa, Belgium and USA.