16 Jun 20

Africa's car market “to hit 2 million by 2035”

New-vehicle sales in Africa (not counting South Africa) amount to around 100,000 per year. By 2035, that could increase to 2 million per year. So says the African Association of Automotive Manufacturers (AAAM). And yes, that's taking into account the negative effect of the coronavirus. 

In fact, the two-million forecast is “very, very conservative,” Dave Coffey, CEO of the AAAM, told South African magazine Engineering News

At present, used cars make up more than 80% of all vehicle sales in Africa – and that's an opportunity, Mr Coffey thinks: “We come off such a low base of new-vehicle sales, that even in the post-Covid-19 environment, new-car sales will grow in the right automotive ecosystem.”

The million-dollar questions: what is that ecosystem, and how do you get it? The answer, says Coffey, is to plug in to Africa's three major growth trends: population growth, the growth of moneyed middle classes, and the growth of various countries' GDPs. 

Median age
Africa's median age is below 20, while Europe's is over 40. The global motorisation rate is 180 vehicles per 1,000 inhabitants, with Europe (580) and North America (830) substantially higher, and Africa (180) significantly lower. Considering those driving factors, automotive growth in Africa looks likely to be huge over the coming years and decades, according to the AAAM.  

But economic and demographic conditions must be accompanied by effective political decisions if Africa's countries want to attract automotive manufacturing and amplify automotive sales. “This is where I applaud Ghana's adoption of the Customs Amendment Bill in March,” Coffey says. 

Road fatalities
The reasons for modernising Africa's automotive sector are not just economic – safety is also a major issue. The WHO expects road fatalities in Africa, already the highest per capita of any continent, to increase by 112% by 2030, due in large part to the continent's ageing fleet. 

Increasing new-vehicle sales will help reduce the problem. In turn, that will only be possible with the right legal, material and financial infrastructure: “Financing institutions need to bring affordable financing to the market.” The AAAM is currently investing in various programmes in Ghana, Nigeria, Kenya and Ethiopia to establish automotive industries in those countries.

Image: Shutterstock

Authored by: Frank Jacobs