Africa Automotive: Egypt and Nigeria are rocking

If anyone was looking to question the growth of the African auto market and industry; take a deep breath and absorb some of the numbers, recognising this could pose a serious challenge to the industry in South Africa.

Recent data from the Central Agency for Public Mobilization and Statistics (CAPMAS) reveals a notable surge in Egypt's passenger car imports, indicating a burgeoning automotive market. In December 2023, the value of imported passenger cars soared to $214,8-million, showing a significant rise from the previous year's figure of $160,7-million.

Similarly, November 2023 witnessed a substantial growth in car imports, with figures reaching $223,4-million compared to $107,3-million in the corresponding month of 2022. The surge, totalling $116,9-million, underscores a robust demand for passenger vehicles in the Egyptian market.

However, despite these positive developments, the period from January to September 2023 witnessed a decline in total car imports, with the value dropping to around $1,3-billion from $1,5-billion in the same period of 2022. This decline suggests fluctuations in Egypt's automotive trade dynamics.

Shifting focus to Nigeria, the country experienced a remarkable increase in used vehicle imports, signifying a dynamic automotive landscape. The National Bureau of Statistics (NBS) reported a significant surge in the total value of used vehicle imports, soaring from N325,05-billion in 2022 to N1,063-trillion in 2023, marking a staggering 226,46% increase within a year.

Notably, between 2022 and 2023, the value of used vehicle imports in Nigeria jumped by N736-billion, according to the NBS foreign trade report for 2023.

The substantial rise recorded in 2023 can be attributed to a surge in vehicle imports, particularly in the second quarter, amounting to N733,91-billion, which represents about 69% of the total imports for the year. However, fluctuations were observed throughout the year, with varying figures in different quarters.

Despite these impressive figures, challenges persist in Nigeria's automotive sector. While the country has seen increased local production of automobiles, particularly from companies like Innoson and Nord motors, the elevated cost of production limits local demand, with patronage mostly from government and institutions.

Additionally, the importation of used vehicles from the United States, Qatar, and Europe remains a popular choice among Nigerians due to affordability. However, high import duties and currency depreciation pose barriers to accessibility for the average Nigerian.

In response to these challenges, the Nigerian government is considering a ban on the importation of used vehicles manufactured between 2000 and 2007, aiming to stimulate local production and bolster the domestic automotive industry.

Meanwhile, in Ghana, Honda Manufacturing Ghana (HMG) celebrated the commencement of automobile production at its Tema plant, marking a significant milestone in the country's automotive sector. With an initial annual capacity of 500 units, HMG's entry into the market reflects West Africa's growing potential as a hub for automotive manufacturing and trade.

Similarly, South Africa's automotive industry remains a crucial contributor to the national economy, accounting for nearly 5% of the GDP. The government's recent adoption of electric vehicle (EV) technology production signals a strategic shift towards sustainable mobility solutions.

Measures outlined in the annual Budget Speech, including investment allowances for new EV investments, underscore a commitment to fostering innovation and competitiveness in the automotive sector.

While these initiatives present promising opportunities for the automotive industry across Africa, collaboration between governments, industry stakeholders, and investors will be essential to address challenges and realize the full potential of the continent's burgeoning automotive market.

https://bit.ly/3TC9rYw

Africa Automotive: Talking parts in Nigeria

Approval by Nigeria’s Federal Executive Council of the new National Automotive Industry Development Plan (NAIDP) for 2023 will go a long way to strengthening any proposals emerging from the West Africa Automotive Show (WAAS) Conference in Lagos that opens tomorrow (May 16).

In its broad form, the NAIDP is intended to provide competitive fiscal and non-fiscal incentives needed by automotive industry manufacturers/producers, investors, developers and all relevant stakeholders.

The NAIDP is aimed at enabling the exponential increase in the local production numbers of vehicles, reaching 40% local content and attaining 30% locally produced Electric Vehicles.

In terms of WAAS, the primary issue, according to former National Automotive Design and Development Council (NADDC) director of planning and strategy, Luqman Mamudu, is the fact local manufacturing of parts and vehicle assembly have stalled, meaning the country relies on “imports of used parts and substandard new ones” with an import bill of $3,3-billion annually.

Mamudu, who will chair the conference at Nigeria’s largest automotive aftermarket trade event says:“I expect that the inaugural conference of WAAS and the show itself will deepen demand for new parts in Nigeria.

“The dominance of used parts potentially undermines any attempt at local manufacturing as they are far cheaper than the original new ones and are perceived as OEM (original equipment manufacturer) standard.”

“Another adverse impact of the full reliance of fully-built automotive importsis that certainly constitutes a strain on the balance of payment position and missed opportunities to create employment. This has the potential to undermine the economy. It is particularly worrying to me because 70% of this is accounted for by pre-owned vehicles and used parts obtained from salvage vehicles.”

However, there is strength in the Nigerian automotive industry with investment of more than $1-billion in manufacturing and assembly capability and he adds: “These facilities remain intact in the form of annual installed capacity of more than 500 000 vehicles. The presence of several global OEMs remains a pipeline of access to technology and capital once the environment is right. Nigeria also boasts a reserve of trained but presently unemployed skilled workforce.

‘By 2017 the NAIDP through a combination of fiscal incentives and protective measures grew installed assembly capacity to above 400,000 units per annum, but only 10% capacity utilisation has been recorded  due to weak policy implementation.

“But it is noteworthy that NAIDP caused the revitalisation of existing automotive assembly plants including Peugeot, Mercedes Trucks, and Volkswagen.”

Mamudu said the conference aims to highlight the need for safety and quality in automotive products.

“Used parts imports account for nearly 90% of aftermarket share. The reasons observed are varied but the preference for used components may be due to eroded confidence for new parts.

“Substandard new components and parts are common in the market, so people are suspicious. To build confidence, suppliers must deploy product quality standards tracking systems. Global brands must also expand their service and parts network as outlets for genuine parts,” he said.

What emerges from that conference will be eagerly awaited by all the stakeholders just as eager to see the full implementation of the African Continental Free Trade Area (AfCFTA), which will be a hot topic at the Intra Africa Trade Fair in Cairo later this year.

https://bit.ly/3IaUypP