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Africa Automotive Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

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  • 86 Pages
  • August 2022
  • Region: Africa
  • Mordor Intelligence
  • ID: 4544734
The African automotive market is valued at USD 30.44 billion in 2021, and it is expected to reach USD 42.06 billion by 2027, registering a CAGR of 5.55% over the forecast period (2022 - 2027).

The COVID-19 pandemic impacted the market very badly, and the majority of markets in the region have not recovered, and the demand is still lagging behind the pre-COVID levels. The demand for new vehicles across the African region has increased until 2018. In 2019, due to a slowdown in the economy, the sales of new vehicles decreased by 4% to 1.17 million units, as compared to 1.22 million units in 2018. Passenger cars accounted for 73.81%, while commercial vehicles accounted for 26.18%.

However, demand across major countries like Egypt, etc., is providing momentum and is likely to continue over the forecast period, creating a positive outlook for the market. Although there was a decline in the overall sales of new vehicles, commercial vehicles in 2019 increased by 0.33% to 308,319 units, compared to 307,301 units sold in 2018. In 2020, Egypt witnessed an increase in new vehicle sales by 26.55% to 231,238 units compared to 182,713 units sold in 2019.

The African market has one of the highest growth prospects across the world. Multinational vehicle manufacturers currently setting up production plants in Angola, Ethiopia, Ghana, Kenya, Namibia, Nigeria, Rwanda, South Africa, and other countries are a clear indicator that there is potential to boost manufacturing for the automotive market in this region. South Africa, Egypt, Morocco, and Algeria have sizeable automotive assembly and manufacturing sectors.

Contract manufacturing is another major growth factor for companies that have franchises to manufacture for the OEMs. For instance, Kenya Vehicle Manufacturers, where the government has shares, hold franchises for Mercedes-Benz, Volkswagen, and Chrysler. Another local company, AVA, assembles medium and heavy commercial vehicles for Mitsubishi and Fuso and Scania, Toyota, Hino, and Tata.

Key Market Trends

Growing Government Initiatives Expected to Enhance Demand

The African market has high growth prospects. The governments and regulating bodies in the region have been taking necessary steps to import, and export used vehicles. For instance,
  • The Automobile Association of Zimbabwe, along with the other members of the African Council of Touring and Automobile Clubs, called on importing and exporting countries to take action to promote safer and cleaner used vehicles in Africa. The formation of the Association of African Automotive Manufacturers (AAAM) started receiving benefits from reforms and policies. For instance, any car company that sets up a local assembly plant in Nigeria, Kenya, and Ghana, could get tax holidays of up to 10 years and duty exemptions.
The level of infrastructure is also increasing in Africa, which is likely to aid the region's automotive market. Western and Northern Africa is expected to drive the growth till 2023, where countries like Ghana and Morocco are expected to be the key players.
  • Ghana aims to become a developed country by 2030. If the country meets even half the target, the Ghanaian automotive market is likely to grow at a tremendous pace, as the economic growth is directly proportional to the growth of automotive markets.
  • Morocco's integration into the global economy was facilitated by the signing of numerous free trade agreements with the European Union and the United States. These trade agreements contributed positively toward the emergence of export activities in the country.
The governments' in the region are taking necessary steps to attract OEMs from all around the world to set up their manufacturing units in the region, which is expected to enhance the demand for new vehicles.

South Africa Expected to Stand as Largest Automotive Industry across the Continent

The South African passenger cars market is the biggest market in the region. However, in 2019, it witnessed a slight downfall in sales figures. In 2019, 355,378 units were sold compared to 365,242 units in 2018, a fall of around 2.7%. Similarly, the commercial vehicle segment in the country witnessed a downfall of around 3.07% and registered sales of 181,233 units in 2019.

In 2020, according to the National Association of Automobile Manufacturers of South Africa, vehicle sales in the country declined by 29.1% because of the pandemic. However, as the country is a hub for exports of passenger cars in several other parts of the world, especially Europe, the market started restoring demand and is expected to continue over the forecast period. For instance,

Export sales recorded a second consecutive month of solid growth in January 2021 and at 22,771 units reflected an increase of 6,468 units, or 39,7%, compared to the 16,303 vehicles exported in January 2020. In the wake of such a positive environment across the country to capture the growing market share, several major OEMs from all over the world are investing in the country. For instance,
  • In April 2019, Ford announced that Ford Motor Company of Southern Africa (FMCSA) is expanding its vehicle export operations by adopting a multi-port strategy with the first shipment of 1,000 locally assembled Ford Rangers from Port Elizabeth to markets in Europe.
  • In April 2019, Nissan announced that it was investing a ZAR 3 billion in its facility in Rosslyn, Pretoria, to produce the next generation Nissan Navara pickup.
However, increased competition from the used vehicle market and weak domestic demand - which is further compounded by constrained household finances (even with low-interest rates) and high unemployment are major concerns for the automotive industry in the country. Yet, with the aforementioned trends and developments, the market is expected to experience decent growth during the forecast period.

Competitive Landscape

The African automotive market is dominated by manufacturers such as Volkswagen AG, Toyota Motor Corporation, Groupe Renault (including Dacia Sales), Daimler AG, Ford Motor Company, Hyundai Motor Company, and Isuzu Motors. Manufacturers are focusing on strategies to improve their business across the region. For instance,
  • In June 2020, Nissan Africa, Middle East, and India (AMI) presented a comprehensive four-year strategy for the region under the company's Global Transformation Plan. The plan aligns with the global direction of rationalization, prioritization, and the focus to bring core models and technologies to a region that accounts for around 10% of the world automotive market.
  • In May 2020, Toyota Motor Corporation announced the launch of the Corolla sedan in South Africa. This car comes with a 1.8L and 2L engine with a CVT transmission.
Key companies are investing considerably across different countries and are setting up manufacturing plants with the help of policies and tax exemptions from local governments. For instance,
  • In February 2020, Groupe Renault announced the launch of the Kiger SUV in South Africa. This car is now launched with a turbocharged 1.0L engine.
  • In August 2020, Volkswagen AG opened its 5th manufacturing facility in Africa in Ghana.
With the present market scenario, new players are also expected to enter the market over the forecast period.

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Table of Contents

1.1 Study Assumptions
1.2 Scope of the Study
4.1 Market Drivers
4.2 Market Restraints
4.3 Industry Attractiveness - Porter's Five Forces Analysis
4.3.1 Threat of New Entrants
4.3.2 Bargaining Power of Buyers/Consumers
4.3.3 Bargaining Power of Suppliers
4.3.4 Threat of Substitute Products
4.3.5 Intensity of Competitive Rivalry
5.1 Vehicle Type
5.1.1 Passenger Cars
5.1.2 Commercial Vehicles
5.2 Country
5.2.1 South Africa
5.2.2 Morocco
5.2.3 Algeria
5.2.4 Egypt
5.2.5 Nigeria
5.2.6 Ghana
5.2.7 Kenya
5.2.8 Rest of Africa
6.1 Vendor Market Share
6.2 Company Profiles*
6.2.1 Toyota Motor Corporation
6.2.2 Volkswagen AG
6.2.3 Groupe Renault
6.2.4 Hyundai Motor Company
6.2.5 Ford Motor Company
6.2.6 Innoson Vehicle Manufacturing Company
6.2.7 Daimler AG
6.2.8 Volvo Group
6.2.9 Isuzu Motors Ltd
6.2.10 Tata Motors Limited
6.2.11 Ashok Leyland

Companies Mentioned

A selection of companies mentioned in this report includes:

  • Toyota Motor Corporation
  • Volkswagen AG
  • Groupe Renault
  • Hyundai Motor Company
  • Ford Motor Company
  • Innoson Vehicle Manufacturing Company
  • Daimler AG
  • Volvo Group
  • Isuzu Motors Ltd
  • Tata Motors Limited
  • Ashok Leyland