Transport

The battle for Africa’s giant car market

Global auto giants are looking to crack the African market, which while dominated by second-hand cars, promises rapid growth as trade tensions threaten sales elsewhere. Serena Chaudhry reports.

JOHANNESBURG AND PRETORIA, SOUTH AFRICA / KIGALI, RWANDA / NAIROBI, KENYA (Reuters) – For many Africans, their first car will be a second hand one.

But could that be about to change?

Used vehicles, like here on the outskirts of Nairobi, are cheap and plentiful.

Sent over at virtually scrap prices from Japan and the Middle East, which have strict rules on which cars are roadworthy.

A billion people live in Africa but they account for just 1 percent of the world’s new car sales.

And almost all of those are in South Africa.

So it’s a potentially lucrative market, and one car giants are hoping to exploit.

CHAIRMAN AND MANAGING DIRECTOR OF VOLKSWAGEN GROUP SOUTH AFRICA, THOMAS SCHAEFER,

“We started scanning markets and we looked into ways of opening them up because they’re literally not functioning right now due to importation of used vehicles all the way from Japan or the US – it’s a dumping ground for used cars.”

Major carmakers have now joined together to lobby African governments to limit car imports.

And allow them to start local production.

VW has set up operations in Nigeria, Kenya and here in Rwanda.

Nissan in South Africa.

And it’s starting to have an effect.

Reuters can reveal that manufacturers are set to get 10-year tax breaks if they set up in Nigeria, Kenya and Ghana.

Companies like VW believe there’s a potential market for three to four million new cars in Africa. 10 times the current amount.

But that will mean turning interest away from the more affordable second-hand market.

CAR IMPORTER, MOSES WACHIRA,

“First of I will lose my source of revenue, because I normally feed my family, I educate my children using the proceeds I get from the car business.”

Incomes are rising across Africa.

And car makers are looking to expand into a new market – due to global trade tensions and bans on emissions in Europe and elsewhere.


Associated Links

  • Nissan
  • VW
  • Volkswagen
  • ThomsonReuters

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    This site uses Akismet to reduce spam. Learn how your comment data is processed.