https://www.engineeringnews.co.za

New African automotive body to offer support to aspirant manufacturers

20th May 2016

By: Irma Venter

Creamer Media Senior Deputy Editor

  

Font size: - +

The initial focus of the newly formed African Association of Automobile Manufacturers (AAAM) will be to assist countries wishing to participate in the automotive value chain in implementing the appropriate legislation and regulations that will allow the automotive industry to thrive on the continent, says Ford Motor Company sub-Saharan Africa government affairs director Dhiren Vanmali.

The AAAM was inaugurated in November in Dubai, with Ford Motor Company sub-Saharan Africa president and CEO Jeff Nemeth elected chairperson and Nissan South Africa MD Mike Whitfield vice-chairperson.

Ford, General Motors, BMW, Toyota, Volkswagen and Nissan are all AAAM members.

The “real key” to growing automotive assembly in Africa, with many countries desperately seeking increased industrialisation, is a relevant industrial policy framework, notes Whitfield.

He emphasises that South Africa’s automotive industry exists because of government’s Automotive Production and Development Programme. Without the programme, the local industry would face the same fate as the vehicle manufacturing industry in Australia, which will close its doors in 2017.

Whitfield adds that the AAAM will not be dictated to from South Africa, despite the presence of some South Africa-based executives, with the emphasis strictly on developing the entire continent as an automotive hub.

Vehicles are currently manufactured in South Africa and, to the north, in Morocco and Egypt.

“The continent can also support manufacturing in the east and west,” notes Whitfield.

This is not to say, however, that every country in Africa will be able to assemble vehicles.

The key driver for the start of manufacturing is the existence of market potential, he says. The only two countries in the world that have a population of more than 100-million people, but not an automotive assembly industry, are Pakistan and Nigeria.

Imports, Finance
Legislative restrictions that the AAAM would like to tackle include limited access to vehicle finance and the proliferation of imported new and used vehicles into Africa – with the latter choking demand for new vehicles and, by implication, the need for local manufacture.

The Deloitte Africa Automotive Insights report indicates, for example, that the volume of vehicles imported into Kenya between 2003 and 2012 grew at more than 300%, from 33 000 units to 110 474 units, with more than 80% of those units being used vehicles.

Passenger vehicles were Kenya’s fourth-largest import overall in 2014, valued at $420-million, making up 2.3% of total imports (by value), while commercial vehicles ranked seventh, valued at $370-million.

“Decreasing the age of cars allowed to be imported into Kenya, while simultaneously decreasing the affordability of these cars by increasing the taxes levied on them should drive sales of more affordable, newer, more roadworthy, locally assembled cars,” states the report. “Incentives to assemble locally, such as tax breaks or the waiving of import duties for parts, will make it more affordable to assemble vehicles in Kenya.”

Whitfield notes that it is important that the automotive industry delivers affordable vehicles, as well as affordable financing, should governments deliver improved regulatory regimes.

“This is key to unlocking these markets.”

He says that new-vehicle finance in Nigeria, if secured, could run at “23% . . . 24%” interest.

He also estimates that 200 000 to 300 000 vehicles are smuggled into Nigeria from Benin each year – something which would also need to be addressed through legislation.

Africa is certainly hungry for cars and trucks, says Deloitte Africa Automotive director Karthi Pillay.

Ethiopia, for example, has the lowest motorisation rate globally, with only two cars per 1 000 inhabitants in 2014.

Around 85% of vehicles sold in that country were used vehicles, with about 90% of this number being Toyotas.

Out of an estimated 90-million new-vehicle sales globally in 2015, only 1.55-million were in Africa.

Edited by Liezille Vermeulen

Comments

Showroom

Booyco Electronics
Booyco Electronics

Booyco Electronics, South African pioneer of Proximity Detection Systems, offers safety solutions for underground and surface mining, quarrying,...

VISIT SHOWROOM 
Flameblock
Flameblock

FlameBlock is a proudly South African company that engineers, manufactures and supplies fire intumescent and retardant products to the fire...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.076 0.131s - 167pq - 2rq
Subscribe Now