New motor-makers body aims at making inroads into Africa

A GROUP of car-makers led by Ford and Nissan executives will seek to work with Kenyan authorities to develop a car-manufacturing industry there, building on talks with Nigerian parliamentarians.

The African Association of Automotive Manufacturers (AAAM), which includes Toyota, General Motors, BMW and Volkswagen, has been formed to take advantage of a surge of interest from African governments in building motor vehicles.

In August, the group urged Nigerian President Muhammadu Buhari and officials to limit the inflow of barely used second-hand cars and firm up policy for car-making and parts supplies.

“What we talked to them about in all the meetings is that if [they] are really interested in this, it can’t just be about bringing assemblers in,” group chairman and Ford sub-Saharan Africa chief executive Jeff Nemeth said.

“It’s got to be about bringing in the whole value chain, whole ecosystem.”

Interest in developing automotive industries in sub-Saharan Africa has risen as oil-and commodity-reliant countries seek to diversify their economies.

Vehicle ownership per thousand people is about a quarter of the global average. There is barely any African manufacturing north of South Africa.

Challenges include imported used cars, lack of vehicle financing and poor roads and ports infrastructure.

The association advised Nigeria to ban imported used cars up to one year old, and levy higher tariffs on vehicles of one to five years old.

Nemeth said the group did not suggest immediate measures against imported vehicles older than that as there was no affordable alternative for many Nigerians.

Car makers had started assembling light vehicles in Nigeria from imported kits, but were far from full-scale manufacturing.

Nigeria’s economy, and vehicle demand, had been hurt by lower oil prices, prompting Ford to halt domestic assembly of Ranger pickups, Nemeth said.

Nissan’s assembly of Patrol sport utility models continued, but at lower levels than the company would have liked, with a shortage of foreign currency, its South African managing director Mike Whitfield said.

Another obstacle in African markets including Nigeria and Kenya was lack of accessible vehicle financing, Whitfield, who is AAAM vice-chairman, said.

The Nigerian government is working with FirstRand’s Wesbank on solutions, including a 23-billion naira (R1-billion) assistance fund.

An application for a Nigerian banking operating licence would be submitted to the central bank this week for Wesbank, sub-Saharan Africa’s largest provider of car loans, National Automotive Council director for policy and planning Luqman Mamudu said.

In Kenya, Volkswagen would start producing Vivo cars on December 21 and move to full assembly of 1 000 cars a year from January, the chairman of the German car maker’s South Africa division, Thomas Schaefer, told reporters in Johannesburg last week.