By on August 19, 2015

media_mobius2_2

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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25 Comments on “Could Africa Support Its Own Auto Industry?...”


  • avatar
    sirwired

    “Hyundai said they would invest $22 million to build an assembly plant in Nairobi and expand dealerships.”

    What sort of plant can you assemble for a puny $22M? I can get that you aren’t getting a stamping plant for that much, but are you even getting a paint shop? Can you do anything other than assemble knock-down kits?

    • 0 avatar
      qfrog

      What sort of labor cost are we talking about here?

      • 0 avatar

        SLAVE WAGES…

        • 0 avatar
          dolorean

          Wow. Just…wow.

        • 0 avatar
          dantes_inferno

          @bigtruckseriesreview:

          > SLAVE WAGES…

          It’s amazing how some aspects of colonialism eventually come back into style.

        • 0 avatar
          Big Al from Oz

          bigtrucksseriesreview
          I do think you have some form of inferiority complex. Considering they way you view developing nations. Even they way you express your views on cars.

          In many cases countries that have cheaper wages doesn’t translate into “slave labour”.

          It is quite relative.

          I do recall some guy called Pch101 stating how the US is better because some items are cheaper than EU or even Australian prices. It had me wondering why people like yourself and Pch don’t live in countries like Bolivia. Things are very cheap there, so it must be a better country.

          I do think you must look at the cost of living. You will find it is cheaper to live in countries with lower wages. This doesn’t translate into “slave”.

          We are fortunate to live in the countries we do, with high standards of living, but that is no reason to display an attitude of superiority. This just shows that you are maybe insecure of what you have little/no knowledge of.

    • 0 avatar
      niky

      SKD assembly plant. Putting batteries, doors, wheels and seats into an almost complete body, then final quality checking.

  • avatar
    SCE to AUX

    Rwanda would be a good place for a car company; they are in the midst of a long-term effort to become the Silicon Valley of Africa.

    Ghana’s Kantaka Motors has a chance. However, I saw a man-on-the-street interview (in his car, actually) in which the respondent said the locally-built car would be judged against the incumbent vehicles they are familiar with: Hyundai, Toyota, VW, and so on. That’s a high hill to climb.

    In addition to the normal competitive difficulties (think of Tesla’s 12-year journey so far), even the best products/companies will fail in an unstable civil climate. I’m afraid there are too many hot spots to enable widespread success; I’m very surprised at Ford’s commitment to Nigeria for this reason alone. Ghana has a decent chance because it is quite stable, and they now are reaping the benefits of offshore oil deposits.

    On top of the competitive challenges and instability issues, there is the problem of market. Many Africans enjoy a good standard of living, but many more do not. A host of variables need to change for the better for the general prosperity to improve, and then people can buy more cars. On the other hand, car factories would produce jobs, and therefore would contribute to their own success – much like Ford in the early 20th century.

    Back to Ghana – I know a bit about it because my daughter lived there for 2 years. One of the most amazing photos she took was of a Boss Mustang sitting (perfectly clean) near the bush in the desolate north part of the country. It made me wonder: who drives it, where did they get it, how is it serviced, and why is it so clean?

    • 0 avatar
      niky

      Africa is a place that has the Chinese and other small players drooling. You have a wide open market not yet dominated by the Japanese or Europeans.

      The only problem, really, is contending with durable surplus from Japan, but that well’s going to run completely dry sooner or later.

      Suzuki is the Toyota of India… because they entered at the right time, with the right model mix.

      I wonder who will become the Suzuki of Africa?

    • 0 avatar
      Signal11

      I agree that the Rwandans are getting their marbles together in fine order, but there are two problems – 1.) they’re still well behind the Kenyans and 2.) it’s a a landlocked country.

    • 0 avatar
      CoreyDL

      “It made me wonder: who drives it, where did they get it, how is it serviced, and why is it so clean?”

      Someone in the illegal persons or drugs trade got it from someone in the Western world as a gift for said trade. It’s serviced by some random mechanic who knows Ford, and it’s clean because everyone is too scared to touch it because they know the identity of the owner.

      :)

  • avatar
    Chicago Dude

    Keep in mind that Nigeria is the 20th largest national economy and over the last 10 years or so and its growth rate has been up there with China. The majority of economic growth in that time has been in telecom and banking as well as entertainment. Oil is less than 10% of their economy.

    It’s not the kind of place automakers should ignore.

  • avatar
    wsn

    Do they come with mounted machine gun standard or optional?

  • avatar
    TonyJZX

    Besides the Mobius there the other cars look like China cars… I’m guessing they buy China CKD kits and have them assembled in Africa… perhaps even cheaper than China labor.

    I like the Mobius. We’ve discussed this car before.

  • avatar
    infinitime

    Speranza Auto, based out of Egypt, currently has a joint venture for the partial manufacture/assembly of Chery models. The are mostly just an assembler presently, but that is slowly changing…

    http://www.speranzaegypt.com/models/

  • avatar

    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.

    • 0 avatar
      Signal11

      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.

  • avatar
    ReSa

    … 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.

  • avatar
    Big Al from Oz

    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.

    • 0 avatar
      Signal11

      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.

  • avatar
    CoreyDL

    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.

    • 0 avatar
      SCE to AUX

      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.


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