The African continent is undergoing stupendous growth, giving rise to the urban middle class population. According to Frost & Sullivan analysis, African middle class population will be approximately 360.0 million by 2020. One of the primary factors driving this growth is transport route integration across the African continent increasing inter-continental Trade, which is also positively impacting the opportunities for commercial as well as passenger vehicles. As a Knowledge Partner for recently concluded Automechanika Dubai, Frost & Sullivan authored a White Paper titled Automotive Africa – Mega Trends, that highlights the key trends impacting the future growth of African continent and its Automotive Industry. These Mega Trends include urbanisation, regional integration, renewable energy, connecting the unconnected, future infrastructure, new business models, amongst others.
The in-depth White Paper focuses on African automotive aftermarket that indicates promising growth owing to nearly 21.6 Million passenger vehicles being operational in Africa currently. These vehicles generate USD 7.68 Billion worth of repair costs annually. Speaking about the aftermarket value, Subhash Joshi, Industry Manager for Automotive & Transportation Practice, Middle East, North Africa and South Asia, Frost & Sullivan said, “On the back of double-digit growth of demand in key Sub-Saharan countries, the value of the Africa’s auto parts market is likely to double by 2020. Countries such as Nigeria, Kenya, Uganda, Ghana, have witnessed double digit growth in demand of parts in the past five years”.
While foreign investment, especially from China is impacting the African economies, customisation in terms of specially designed vehicles for the African terrain, eg. Mobius and Flat pack OX trucks, can also be seen. The White Paper unveils the leading Vehicle Brands across Africa, with European and American auto brands leading in North Africa while Japanese and Korean brands occupy top spots across West and Sub-Saharan Africa.
The United Arab Emirates (UAE) is known to be a major re-exporter of spare parts throughout the Gulf and wider Middle East. Now Sub-Saharan African countries such as Nigeria, Angola, Congo Republic, and North African countries such as Libya are gaining importance as markets for re-exported parts from the UAE. These countries are becoming larger markets that cover about 30-35 per cent of total exports from the UAE and in three to four years, the market share for the African region will rise to 45-50 per cent.
Local parts production is limited to a few North African countries like Algeria, Egypt and Morocco which are self-sustained markets. Limited impact of government legislation/regulation in most of the Sub-Saharan African countries is leading to increased Grey Imports, with Nigeria being the largest market. As per Frost & Sullivan analysis, 55-60 per cent auto parts market is expected to be driven by Grey Imports.
While the aftermarket is definitely experiencing growth, competition between manufacturers and importers of new vehicles is also intensifying. Manufacturers are taking direct action to grow their presence across the regions in anticipation of market growth. For example, Honda setting up its West African office in Nigeria. The UAE-based importers like Al-Futtaim Group are also expanding into the African market.
Overall, African markets offer potential for assembly/manufacturing activities. The share of Chinese OEMs is expected to rise in short-medium term. The White Paper concludes that Asian OEMs are expected to play critical role in the future as a result of the huge potential demonstrated by the market.
If you are interested in more information about this White Paper or have any queries, please send an e-mail to Tanu Chopra / Paroma Bhattacharya, Corporate Communications, at tanu.chopra@frost.com / paromab@frost.com, with your full name, company name, job title, telephone number, company e-mail address, company website, city, state, and country.
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