A large proportion of new cars sold in Africa are imported vehicles. However, production on the African continent is to be significantly increased in the future. Morocco already exports more cars than it imports. Rising incomes and high GDP growth rates will further increase demand. Mobius Motors, an African manufacturer, has been producing off-road vehicles (SUVs) in Kenya since 2010. Politicians also support the trend towards buying new vehicles, after decades in which Africa was virtually the last place of use and rest for used vehicles. A number of governments have made the import of new vehicles more tax-efficient. The sale of end-of-life vehicles made more difficult or banned altogether.
In December 2020 the president of the African Association of Automobile Manufacturers (AAAM) signed a cooperation agreement with the German Association of the Automotive Industry (VDA). The AAAM is the first automotive association with a pan-African approach and was founded in 2015 by globally operating car producers and original equipment manufacturers (OEMs). About the cooperation the CEO of AAAM, Dave Coffey, in an interview.
Mr. Coffey, what does the AAAM hope to achieve with the cooperation agreement with the VDA?
VDA brings a lot of expertise, resources and a strong network to support the development of automotive policies and ecosystems. You are in favor of effective industrialization. The growth of the automotive sector on the African continent now times necessary. Therefore, it is an ideal partnership in which we complement each other. This is a powerful alliance.
How African markets and companies can benefit from closer cooperation with the VDA?
We believe that the market for new vehicles in Africa will grow from 1.1 million units in 2019 to 5 million passenger cars per year by 2035. This growth requires the implementation of progressive auto policies. Of an ecosystem across the continent. Vehicles will be assembled in some countries in the process, supported by surrounding economies that participate in the value chain in manufacturing and supplying components. Ultimately, the vehicles and components will be traded regional markets, and within the largest free trade bloc in the world, the AfCFTA. Country and regional partnerships are not new to the development of the automotive industry around the world.
What trends do you see in African markets?
There will be a transition in Africa towards electromobility through alternative powertrains such as CNG (compressed natural gas), hydrogen, hybrids, e-fuels. Africa is not yet prepared for all-electric vehicles, and alternative powertrains will offer African governments the opportunity to reduce fuel imports and improve the balance of payments. Electric vehicles will be manufactured in Africa on a large scale if local demand supports production.
In the interest of safety, there will be a strong focus on ensuring that imported used cars are roadworthy and that their age is limited in order to reduce pollutant emissions. More than 80 percent of all vehicles sold in Africa are imported used cars. While there will be a transition as the automotive sector industrializes in Africa, used cars will eventually come from vehicles assembled in Africa. This "Made in Africa-Trend will have a significant positive impact on balance of payments, job creation and economic growth.
There will be a lot of emphasis on providing affordable mobility. This will include vehicle financing from new-. Used vehicles along with alternative mobility solutions include.
Competition with Chinese automakers is getting tougher around the world, what does this mean for African markets?
Vehicle manufacturing in Africa needs to be globally competitive. We have a roadmap to achieve this at the scale that will result from trade between regional markets within AfCFTA. The newly formed AfCFTA Secretariat has a unique opportunity to shape and drive the needed continental automotive policy with countries willing to participate. We support this. The development of the automotive industry in Africa will not happen by accident. It requires bold and deliberate leadership in both the public and private sectors. This is exactly what is developing.
A key element of the cooperation agreement is vocational training – what needs to be done here? VDA will share its expertise from its European experience with collaborators. Share with players in the automotive value chain in the various African focus countries. Demand for certain technologies or expertise will feed into training, for example in alternative powertrain technologies. When skills training is needed that goes beyond what VDA and AAAM offer, such as vocational training, expert consultants, including nonprofit organizations, will be brought in.