Africa is a hard continent for the outsider to get your head round. It might seem like one great country but it is many different states and colonies with their own individual way of doing things. It contains more variety from one tip to the other than North America does.
While it enjoys a reputation of being “untapped” it’s also not the first place to come to mind when thinking of profitable markets. It’s fair to say that, as a whole, it’s a low-income market. There are only 44 vehicles for each of the 1000 inhabitants, and they seem obsessed with used cars. It’s a developing market, especially for cars, but this might be the wrong way to look.
The country of South Africa looks at its car industry as a success story. Despite being only 6.9% of the nation’s GDP they have solid sales, both in exports and local. These includes names such as BMW, Toyota, Nissan and so on. One company that has pulled out is General Motors, to concentrate purely on the American market. This is not the beginning of a mass exodus though–the other factories seem stable at time of writing.
Car and truck manufacture have a long-standing heritage here since the 1920s. Symbiotic manufacturing is also thriving, there are a number of component factories such as Bloxwitch and Arvin Exhaust. In total over 200 different component businesses are based in South Africa and growing. The provinces of Eastern Cape and Gautenay is the center of auto manufacturing, including cars for the US market, making this the Detroit of South Africa.
Given the US car Industry’s need for period bail out, it might seem that the industry wouldn’t exist without a strong government program supporting it. Many countries overtly subsidize auto manufacture (also known as industry under license from the government). This won’t be seen in South Africa, where 85% of all car sales on the continent take place. Investment is critical in 2020, perhaps more so than ever.
Are there other countries with an auto industry?
Yes, car companies invest in Morocco, Egypt and Algeria. They also seem to be looking into more developing countries like Kenya, where Toyota has a presence and Algeria where although Renault seem to the main player there is also investment from VW, Peugot, Hyandai and Nissan, among others. The Algerian government vocalized ideas of “planning to double” the total employment in the region.
Elsewhere in the continent VW are looking at developing an Uber-like business in Rwanda. Because most cars aren’t new it makes sense to look at the rented car industry as an alternative.
Is there a trend?
It’s worth noting that Renault was the only car manufacturer in Morocco up until 2019 when Peugot arrived. Given how close it is to Spain, it’s a cheaper place build cars that car be shipped back to a European Market. These tentative movements have brought great economic increase to the entire region of Northern Africa and heralded positive change, or at least that’s how it looked before our current situation.
It might be that other companies join General Motors in abandoning the continent. Unless markets pick it won’t make sense for car companies to manufacture more the local market needs, which won’t have the same drastic impact on the local economy. The governments need the car companies if Africa is ever going to alter. It’s not hopeless, it just needs a bit of creative thinking, and some hope. We could all use some hope right about now.