According to the World Economic Forum, Africa’s automotive industry was valued at over $30 billion in 2021 and is expected to grow by more than $12 billion in the next three years. Industry modelling equally suggests while just over 1 million vehicles were produced on the continent last year, this could grow to over 5 million over the medium to long term. NAACAM Head of Policy and Regulatory Affairs, Beth Dealtry was interviewed on SABC Channel Africa to discuss this and the opportunities for the development of an African automotive industry.
Unpacking the current automotive landscape in Africa, Beth noted, “South Africa remains the largest manufacturer on the continent. Total African vehicle production is about 1.1 million units annually with SA accounting for just over 600,000 of these units and Morocco being the other major player, producing more than 500,000 units per annum. While noting the industry is heavily dominated by South Africa and Morocco, Beth added that, “Many African countries have recognised the opportunities within ACFTA and there has been growth in the number of African countries looking to find their part in the African autos value chain including the likes of Rwanda, Ghana, Kenya and Namibia.”
Ms Dealtry cautioned that by far the main challenge facing the development of Africa’s auto manufacturing industry are grey secondhand vehicle imports. This is equally seen as a challenge in the component sector in the form of component dumping from elsewhere in the world. “There are vast numbers of second-hand vehicles imported into Africa. For example, data from the African Association of Automotive Manufacturers (AAAM) indicates that in Nigeria there was approximately 10 000 new vehicle sales last year and 700,000 secondhand imports. This means that vehicles and components produced in Africa are struggling to gain market penetration because one cannot compete with these secondhand grey imports.”
She said the AAAM, of which NAACAM is a member, has developed an African continental automotive strategy and is trying to facilitate coordinated policies across the continent to slowly ban these types of imports.
“This is important to create a conducive market for vehicle manufacturing. Very often OEMs try to produce where they are selling their vehicles. If we can get the African market unlocked it will create huge potential to grow our production in Africa.”
Ms Dealtry said there are other logistics and infrastructure challenges including how to move components between African. “When considering that this is a global value chain, there is overall competitiveness reigns supreme in sourcing decision. This, therefore, requires Africa to be globally competitive.”
Aside from policymakers facilitating the phasing out of grey vehicle sales, Beth also noted the role governments must play in driving localisation across the continent. “localisation was a big point of conversation at a recent meeting in Namibia focused on discussing how they can become more incorporated into the autos value chain. By encouraging vehicle manufacturers to source locally from African countries, the number of opportunities for multiple different African countries grows without requiring product substitution of what is already produced in some countries on the continent. And ultimately, this matters, as localisation of components is what creates value-add, jobs and ultimately, economic growth for the entirety of Africa. Listen to the full interview via Channel Africa: Discussion on Africa’s automotive industry