Northwest Arkansas Democrat-Gazette
Carmakers study production opportunities in Africa
When Nigeria first unveiled incentives for carmakers to set up plants, its auto industry had ground to a standstill.
Fast- forward two years, and there are at least 36 automakers with production licenses in the continent’s biggest economy, with Volkswagen AG, Nissan Motor Co. and Ford Motor Co. already making vehicles with local partners. The country is seeking to join South Africa as the only manufacturing base for the car industry in sub-Saharan Africa, with countries from Ethiopia to Uganda hoping to follow suit.
“Africa really is the last automotive frontier,” said Mike Whitfield, Nissan’s head of sub-Saharan Africa. “You still have a very un- motorized population.”
Vehicle ownership on the continent is estimated by the International Organization of Motor Vehicle Manufacturers at less than 50 per 1,000 people, compared with about 800 in the United States. Demand for passenger cars in particular is growing in sub-Saharan Africa, as road conditions and fuel quality improve and young populations with disposable income seek mobility, Whitfield said.
Developing a large-scale automotive industry will require reducing the flood of used cars into the region and developing local manufacturing and supply of components, said Anthony Black, an economics professor at the University of Cape Town.
A group of global automakers recently created an African Association of Automotive Manufacturers to coordinate efforts and advise governments on policies, said Jeff Nemeth, the chief executive officer of Ford in sub-Saharan Africa.
“We’ve done this many times in different countries all over the world,” Nemeth said. “We’ve seen the good policies and the bad policies, what works well, what works not as well.”
Nigeria’s not the only African country trying to promote domestic vehicle production and automakers are hoping their new association can help coordinate policies and investment in the region, Nemeth said.
The only sub-Saharan African country with any real automotive production is South Africa, which has used government incentives to attract manufacturers. The local industry body is projecting record automotive exports this year of 344,000.
Ford projects that the automotive industry in Africa will grow by at least 40 percent by 2020, Nemeth said.
“The opportunities are massive,” he said.