Could Africa Support Its Own Auto Industry?

Aaron Cole
by Aaron Cole
could africa support its own auto industry

Africa may be one of the last untapped continents for automakers and one of the largest growth markets in the future. But the opportunity is now for carmakers such as Uganda-based Kiira Motors, Kenya-based Mobius Motors, Nigeria-based Innoson and Ghana-based Kantanka Motors, they say.

“The automotive industry presents one of the fiercest competitive market environments,” Kiira Chief Executive Paul Isaac Musasizi told the Wall Street Journal. “We need to remain focused, courageous and committed.”

His commitment is shared by other automakers such as Ford, who recently announced that it would produce 5,000 trucks at a plant in Nigeria for sale within the continent. Hyundai said they would invest $22 million to build an assembly plant in Nairobi and expand dealerships.

A cursory look at market penetration for automakers looks promising — no African country cracks the top 50 in vehicles per capita.

According to Ward’s Auto, East African countries such as Kenya are registering more new cars than before, with total registrations increasing 9 percent in 2014 from 2013. Most of those cars are used imported examples, though new car purchases were up in the country last year as well.

All that may be why startups such as Kiira, which makes hybrids, are looking for investors to build locally produced cars for Africa, which places taxes on imported parts like headlights and batteries.

The continent’s most economically developed country, South Africa, has manufacturing plants for BMW, General Motors, Mercedes Benz, Nissan, Renault, Toyota and Volkswagen, which exported 271,000 cars in 2010.

That could create a favorable, home-grown automotive business if the countries labor supply settles into consistent manufacturing.

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  • If Any 5 Countries in Africa combined, they'd have the strongest economy (developing) in the world. All we ever hear of Africa is about the wars and violence. I got a chance to visit the Seychelle's Island Mahe recently and I was amazed. A small Island Republic held together by mainly tourism and fishing industry. The mineral wealth of Africa is RIDICULOUS and mostly untapped.

    • Signal11 Signal11 on Aug 20, 2015

      Let's not be ridiculous. All five nations of the East African Community combined is barely equal to a FIFTH of the size of ASEAN's smallest major economy (Vietnam) by PPP. All twenty nations of COMESA combined is barely the size of the Philippines. If the wealth of nations were just a matter of mineral resources, North Korea should be far and away ahead of the South Koreans by now.

  • ReSa ReSa on Aug 20, 2015

    ... albeit much of it bought up in bulk by China, the US and others. Countries that have natural resources have well paved roads to and from the mines. If Chinese, they're built by Chinese with Chinese materials, meant to bring mined minerals from the Chinese mine to the Chinese operated harbour. This will not significantly boost the local economy and therefore purchasing power in these countries will stay behind. But indeed, many very friendly places to be fount in Africa! ON TOPIC: The Toyota/Nissan combo is and will be King in Africa for a long time to come. African competition will only have a future if they fill a niche, just like the Mobius, or when they offer outrageous Bang for the African Buck.

  • Big Al from Oz Big Al from Oz on Aug 20, 2015

    There is one part of Africa that is often overlooked, that is the northern and Mediterranean region. I have read that the Nissan Renault Alliance are setting up Datsun factories in Morocco. Also if you look at the "World Highways" site you will notice Morocco is investing in a significant amount of road transport infrastructure. Also, South Africa does have a relatively advanced auto industry. Even the 5 cylinder 3.2 litre Duratorq/Baby Powerstrokes fitted to the Transits come from Sth Africa. Many brands are manufactured there from BMW to Toyota. Ethiopia is also developing at a fair clip at the moment.

    • Signal11 Signal11 on Aug 20, 2015

      North Africa really isn't Africa when people speak of Africa. North Africa/Mediterranean Africa is no more "African" than Europe is Asian because Europe happens to be on a small, isolated part of the same continental Asian landmass. Culturally, ethnically, geographically, economically, may as well be separate continents.

  • Corey Lewis Corey Lewis on Aug 20, 2015

    All those cars are like some bastardized Isuzu product from 1998. Of course this is as I expected before I clicked any links. I don't see any real, widespread investment in the auto industry being worthwhile until there is more stability and reduced corruption. Anything big you try and do will be pillaged by local thugs, wherever you are. There would also undoubtedly be frequent work stoppages and supply chain interruptions unless you're right on the coast, or in South Africa. The financial industry doesn't even consider Africa at this point - it's not discussed. There's N and S America, then Europe and Asia, and Aus. Skip the bit in the middle.

    • SCE to AUX SCE to AUX on Aug 20, 2015

      Sad but true. The same is true of Haiti, an endless pit of need. Anything nice gets stolen overnight (like construction materials), and improvement projects are left unfinished. Crime and corruption need to dissipate before meaningful progress can be made in such places. Detroit makes for an easy target, but at least you can still conduct business there.