Africa Automotive Market - Growth, Trends, and Forecasts (2020 - 2025)

The African Automotive Market is expected to grow at a CAGR of around 6.5%, during the forecast period.

Africa's market is the most underdeveloped automobile market in the world. Apart from South Africa, Morocco, Egypt and Algeria, the automotive market in rest of the countries is considerably small in comparison. The major reasons for this limited growth are the low-average income and the lack of a sizeable middle-class population. Also, the high lending rates have made ownership of a car restricted only to the wealthy and prosperous. Ghana, a promising market, has a car loan interest rate that fluctuates around 32%. Even in Nigeria, one of the biggest economies of the continent has a loan interest rate of about 12%. This makes taking a car loan an expensive proposition, which is hindering the automotive market in the country.

Currently the new automotive industry in Africa is plagued buy the import of used cars from other countries. For instance, in Japan, where strict vehicle inspections force cars out of circulation after just a few years, vehicles are exported to countries like Kenya. To curb these practices and revive the local industry, the government plans to wind down imports of cars that are more than three years old by 2021.

The market is segmented by the type of vehicles and geography. Passenger vehicles are expected to hold a greater market share, but commercial vehicles are expected to grow at a faster rate.

Key Market Trends

Growing Economy and Government Initiatives Expected to Help the Automotive Industry

The African market has high growth prospects. For a continent with 1 billion inhabitants, it only occupies 1% of the global new car sales. Also, 85% of the total new cars are sold in South Africa itself. The sub-Saharan region where there is a potential for upto 3-4 million cars from the existing number of around 425,000 is expected to offer high returns to players who are willing to seriously enter the region. After the formation of Association of African Automotive Manufacturers (AAAM) companies are expected to benefit from reforms and policies. For instance, any car company that sets up a local assembly plant in Nigeria, Kenya and Ghana, could get tax holidays of up to 10 years and duty exemptions.

The level of infrastructure is also increasing in Africa, which is likely to aid the automotive market of the region. Western and Northern Africa is expected to drive the growth till 2023, where countries like Ghana and Morocco are expected to be the key players. Ghana aims to become a developed country by 2030, and even if the target is met halfway, the Ghanaian automotive market is anticipated to grow at a tremendous pace, as the economic growth is directly proportional to the growth of automotive markets. Morocco's integration into the global economy was facilitated by the signing of numerous free trade agreements with the European Union and the United States. These trade agreements contributed positively toward the emergence of export activities in the country. Also, the country developed an investment cluster program, which saw Renault enter the local market. Renault will be the only global automaker assembling vehicles in the country, until the arrival of Peugeot in 2019.

South Africa Expected to be the largest automotive industry in the continent

South Africa has an active automotive sector which contributes to around 6.9% of the country's overall GDP. The industry employs around 120,000 people in vehicle and component production and witnesses an annual investment of more than R12 billion. Major automobile companies such as BMW, Volkswagen, Toyota, Renault, Nissan and Ford manufacture vehicles in South Africa for local sale and for exports. Many of these players are making sizeable investments in the country, leading to a further increase in production.

Also, South Africa revamped its automotive industry framework: South African Automotive Masterplan (SAAM) in 2019 with government having set a target of raising local content from 39% currently to 60% by 2035. It also plans to achieve 1% of the total global vehicle production by 2035. Doubling the total employment in the sector to 240,000 people, achieving industry transformation across the value chain and deepening value addition across selected commodities are also expected to help the industry grow over the forecast period.

Competitive Landscape

The market for African automotive industry is a consolidated one. The region is characterized by the presence of major manufacturers who also cater to other geographies. Volkswagen AG, BMW, Toyota, Nissan, Ford, Groupe PSA and Renault are expected to be the major players. Companies are investing considerably across different countries and are setting up manufacturing plants with the help of policies and tax exemptions from local governments. With the present market scenario, new players are also expected to enter the market over the forecast period.

Reasons to Purchase this report:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

TABLE OF CONTENTS

1 INTRODUCTION

• 1.1 Study Assumptions
• 1.2 Scope of the Study

2 RESEARCH METHODOLOGY

3 EXECUTIVE SUMMARY

4 MARKET DYNAMICS

• 4.1 Market Drivers
• 4.2 Market Restraints
• 4.3 Industry Attractiveness - Porter's Five Force Analysis
  • 4.3.1 Threat of New Entrants
  • 4.3.2 Bargaining Power of Buyers/Consumers
  • 4.3.3 Bargaining Power of Suppliers
  • 4.3.4 Threat of Substitute Products
  • 4.3.5 Intensity of Competitive Rivalry

5 MARKET SEGMENTATION

• 5.1 Vehicle Type
  • 5.1.1 Passenger Vehicles
  • 5.1.2 Commercial Vehicles
• 5.2 Geography
  • 5.2.1 South Africa
  • 5.2.2 Morocco
  • 5.2.3 Algeria
  • 5.2.4 Egypt
  • 5.2.5 Nigeria
  • 5.2.6 Ghana
  • 5.2.7 Rest of Africa

6 COMPETITIVE LANDSCAPE

• 6.1 Vendor Market Share
• 6.2 Company Profiles*
  • 6.2.1 Daimler AG
  • 6.2.2 Fiat
  • 6.2.3 Volkswagen AG
  • 6.2.4 Toyota
  • 6.2.5 Ford
  • 6.2.6 Groupe PSA
  • 6.2.7 Mahindra
  • 6.2.8 Nissan
  • 6.2.9 Renault
  • 6.2.10 Tata Motors
  • 6.2.11 Innoson Vehicle Manufacturing Company

7 MARKET OPPORTUNITIES AND FUTURE TRENDS