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Friday / 24 May 2024
HomeFeaturesWhy Africa is the final frontier for automakers

Why Africa is the final frontier for automakers

Africa is touted as the final frontier for car manufacturers as vehicle ownership on the continent is remarkably low in comparison to all others.

Calculations from Nissan show that the “motorisation average” in Africa is 42 vehicles per 1,000 people, less than a quarter of the 182 vehicles per 1,000 people elsewhere in the world.

In markets like the European Union, the motorisation rate is as high as 567 vehicles per 1,000 people according to the European Automobile Manufacturers’ Association – going up to 698 per 1,000 in Luxembourg – illustrating the massive divide between Africa and affluent first-world countries.

Therefore, no market in the world poses as much growth potential for vehicle ownership (read: sales) as Africa seeing as most of them are already satiated to a large degree.

The main barrier to increased sales on the continent, Reuters writes, remains affordability, unreliable infrastructure, and supply chain snarls – serious issues that manufacturers are just now starting to deal with.

The region is generally also seen as a dumping ground for used and unsold petrol and diesel vehicles that no longer meet the regulatory requirements of their home countries.

Manufacturing potential

Apart from boosting market share, Africa poses tremendous potential for the manufacturing of vehicles but has a relatively small presence in the global industry.

Morocco and South Africa currently account for the lion’s share of the continent’s vehicle output with major brands including BMW, Ford, Mercedes-Benz, Nissan, Toyota, and VW all operating in either one or both of these economies.

However, many of these manufacturers still rely on imported components as sourcing vital parts within Africa is still quite difficult despite the continent being incredibly rich in natural resources cobalt, copper, lithium, and platinum required to build cars.

That’s not to say these nations don’t have the know-how to provide the necessary parts, just that many of them are not developed enough to do so at a scale that can support a multinational production facility churning out hundreds of thousands of vehicles a year.

To that end, attempting to seize the final frontier, several carmakers have endeavoured to set up shop in African countries in the near future as well as source materials from local suppliers in an effort to build cars where they sell them.

These include Stellantis, parent company of brands such as Citroen, Fiat, Jeep, Maserati, and Peugeot; as well as Chinese automaker BYD.

Doing so will not only boost industrialisation on the continent but also make vehicles more affordable and readily available for African citizens.

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