Africa’s Auto Industry: The Final Frontier for Growth?

Africa's automotive industry has some of the most untapped potential in the world. What could that mean for the future?

We all remember when America’s automotive industry was in decline just a few years back during the recession. However, looking at some aspects of it now, it’s almost amazing how much recovery and growth have taken place. New car sales are once again thriving. However, there’s still untapped potential out there. And it’s not necessarily in the United States. What if I told you Africa shows some of the highest promise for auto industry growth in the future? Can you dig it? Let’s find out why that’s the case, today on Adam’s Autos.

Sales and Potential: The Key Words

            

Currently, there are four countries in North and South Africa that account for 80 percent of all new car sales on the continent. But this is expected to change as Africa’s auto industry advances and becomes more competitive, according to Deloitte. Production in Africa is seen as not necessarily being viable in the short-run, but holds massive potential for being ridiculously profitable in the long-run. This probably just sounds like standard college economics all over again to some. But to investors and many African officials, it sounds like opportunity. Something that people don’t always speak on when it comes to African countries. In fact, in 2015, Africa accounted for about 1.55 million new car sales on a worldwide scale of over 90 million new cars being sold. That may just sound like the tip of the iceberg on a global scale (and it is), but by 2031, analysts predict that because of a growing middle class on the continent as a whole, new car sales could push over 10 million per year! That’s in less than 20 years! Amazing figures for an equally amazing country that holds so much rich world history.

Around the Nation

In other places around Africa, the story of potential is much the same. Nigeria’s vehicle market is dominated by commercial vehicles and used cars that have been imported. New car sales only account for roughly 10% of most vehicles sold there, but the South African government is making efforts to help jump start the Nigerian automotive sector even more. Additionally, several automotive companies such as Nissan and Ford have begun to export vehicle kits to Nigeria so cars there can be considered “locally made”, and also so they can begin to grow business in an area where there’s a high GDP per capita. Over in Kenya, the truck industry has been established for some time, but it is relatively low volume in terms of production. However, since Kenya is a gateway to East Africa and has a history of production and business, the country could potentially be a hub for new car assembly in the future. Similarly, in Ethiopia, the country is geared towards industrialization and has Africa’s second largest population of 94 million. Thus, it is likely that the success of the auto industry we’ve seen in other nations, such as China and the United States, could be easily replicated there.

So what are your impressions of this new-found potential in the African automotive industry? I feel that it’s always been there, and in other places as well, but we just never acknowledged it. It’s so easy to focus on ourselves until we sometimes can totally tune out others and their positivity. Given history and how Africa was exploited in generations past for its raw potential, let’s hope that this new-found raw potential is used to continuously build up communities there and the global markets as a whole. I seriously have no doubt that Africa will become a major global force in future automotive production given the right steps and investments are taken into consideration.

Read more on a few statistics here: http://afkinsider.com/123888/why-africa-is-the-final-frontier-for-automotive-growth/

That wraps it up for now! Until next time, ROLL ON!

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