Africa CNG and LPG Vehicle Market - Growth, Trends, and Forecasts (2022 - 2027)

The Africa CNG and LPG Vehicle Market was valued at USD 1.28 billion in 2021 and is expected to surpass a net valuation of USD 1.90 billion by 2027 end, registering a CAGR growth of 6.78% over the forecast period.

The road and transport sector in Africa witnessed a steady slump in transition during the COVID-19 pandemic owing to strict government regulation prevailed. In addition, people avoided traveling out of their respective homes to avoid virus spread which ultimately reduced the adoption of vehicles. Moreover, the demand for vehicles in public and private transportation witnessed a transition during 2021, and post 2021, the market showcased a steady recovery during the complete 2022.

With 36% of Africa's population living in cities, the country is home to around 16% of the world's population. The region is still primarily dependent on buses, cars, vans, and trucks for transporting people and commodities.

Road transport in Africa contributes nearly 13% of global CO2 emissions, and with the recent spike in the oil import prices, the government is putting up efforts to create cleaner engines that run on alternative fuels including batteries, compressed natural gas (CNG), autogas (LPG), and other range of biofuels. Owing to the decreasing air quality and increasing air pollution in the region, the government is encouraging end users for converting their conventional fuel vehicles to bio-fuel vehicles like, CNG and LPG fuel as these fuels are environment friendly and lower carbon dioxide emissions, switching to CNG can help mitigate greenhouse gas emissions.

However, the lack of players involved in production of company fitted CNG and LPG vehicles in the region is a restraint for the market. The major conversion of vehicles is done by aftermarket activities using imported kits for conversion.

Considering these factors, demand for CNG and LPG vehicles is expted to witness positive growth rate during the forecast period.

Key Market Trends

Compressed Natural Gas to Hold Highest Growth Potential

The low fuel cost of compressed natural gas which reduces the per kilometre driving cost of the vehicles is encouraging more vehicle users, especially taxi fleet operators to convert their conventional fuel vehicles.

Nearly half of the CO2 emissions on the African continent are seen coming from South Africa, which is subjected as the 12th largest emitter of the gas in the World. This is mostly attributed to coal-fired power generation, transportation, and mining making the environmental pollution worsen. In addition, the largest metropolis in sub-Saharan Africa, Johannesburg, has also been ranked as the eighth most polluted city in the world. Moreover, the nation is taking significant steps in developing a climate plan, promising to reach the peak of its national emissions by 2025, and the transportation industry will significantly improve the environment. This is fuelled by adopting economical and best alternative of gasoline vehicles that is CNG powered vehicles.

In every situation examined and tested, CNG has been proven to be less expensive than competing fuels in terms of fuel cost and efficiency. The difference varies between 35% and 75% when compared to diesel and gasoline, 20% when compared to electric vehicles, and 60% when compared to gasoline-electric hybrid vehicles as well.

In addition, these CNG fuels offer an engine efficiency that is 50% quieter and offers a low CO2 rate of between 7% and 16%. With ongoing research and innovation in fuel technology, Bio-CNG, which is still in its early stages of development, has been seen as a potential alternative to cut CO2 emissions completely. The price of fuel and the cost of purchasing the vehicle are the two main economic considerations at play.

In addition, companies from Middle East are investing in Africa to robust the CNG fueol station infrstructure. For instnace, in August 2022, companies from Iran invested USD 2.5 billion to robust the services of natural gas supply in the country. In addition, Nigerian companies announced their plans to ork with Nigerian government to built 10,000 fuel station for CNG.

Considering these prime factors, demand for compressed natural fuel is anticipated to witness the highest growth potential in the forecast period.

Egypt Dominates the Market in Africa Region

In the African region, Egypt is expected to dominate the market over other African countries. The conversion rate of old conventional fuel-based vehicles in the country is rising because of the low operational cost.

The Egyptian government is spending heavily on providing the required infrastructure for the promotion of CNG vehicles in the country under the conversion program initiative. The conversion program aims to lift the conversion rate of vehicles to about 2,600 per month by encouraging owners to take advantage of low-cost advantages and access to finance for the facilitation and expansion of infrastructure of natural gas fueling stations and conversion centers. Egyptian fuel station operator Gastec has also strategically partnered itself with Eni in order to develop multi-energy stations across the country which will offer alternative fuels apart from diesel and gasoline.

Government and public agencies are also promoting the adoption of alternative fuels in Egypt. For instance, In December 2021, Cargas and Gastec, who is the Egyptian Ministry of Petroleum and Mineral Resources signed a strategic contract worth EUR 11.3 million in order to finance the national program to convert cars to the adoption of natural gas as a fuel alternative. Under these contracts, the Egyptian Micro, Small, and Medium Enterprise Development Agency (MSMEDA), will together expand the framework initiative of natural gas as a fuel for cars by taking the CNG station count to 1000 which is 306 right now.

Considering these developments and factors, Egypt is expted to lead the Africa CNG and LPG vehicle segment during longer term forecast period.

Competitive Landscape

The Africa CNG and LPG Vehicle Market is fragmented, with many players accounting for a small market share. Some of the prominent companies in the Africa CNG and LPG Vehicle Market are ExoGas, Seat SA, Volkswagen AG, BRC Gas Equipments and others. These players are investing heavily in the research and development of CNG and LPG vehicles.

For instance, in August 2022, CNG Holdings and Scania with their mutual alliances delivered South Africa's first dedicated natural gas truck. The introduced CNG trucks follows Euro VI compliance standards.

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