The Covid-19 pandemic has wreaked havoc on new-vehicle sales in Africa, which are expected to drop from 1.16-million units in 2019, to a current forecast of 830 000 units this year, says African Association of Automotive Manufacturers (AAAM) CEO Dave Coffey.
“This is a 28% reduction, which is quite significant.
“However, the market will recover, and we believe that new-vehicle sales on the continent can increase to five-million [units] per year in the medium term.”
The AAAM is actively promoting the rollout of vehicle manufacturing value-chains in Africa, which requires intervention from governments to curb illegal, grey and second-hand imports, as well as the drafting of policies to support local vehicle and parts assembly.
Coffey says second-hand and grey vehicle imports constitute more than 80% of vehicle sales in Africa.
“With an effective auto ecosystem, this can be reduced to an acceptable ratio that enables integrated auto manufacturing, whilst ensuring the safety of the consumer without major disruption to the existing used-car market.
“Ultimately all second-hand vehicles should come from vehicles that were assembled on the continent, or that were imported as new vehicles, as part of an automotive programme.”
Coffey says the automotive industry plays a “disproportionately small role” in manufacturing Africa.
“In 2019, new-vehicles sales in Africa represented 1.3% of global demand, while Africa has 17.2% of the world’s population.”
The economic benefits of having a fully-fledged integrated auto manufacturing sector are considerable, adds Coffey.
“It requires advanced manufacturing technologies, while it also creates a deep value chain and skilled employment.
“The significant growth to five-million vehicles sold in Africa requires the implementation of effective automotive policy – the core focus of the AAAM.
“The opportunities for growth exist if one considers the young population, rapid urbanisation and extremely low rate of motorisation [in Africa].
“The potential is huge.”
* Coffey spoke at an AAAM and Deloitte Africa Automotive Forum event.