The future of cars in Africa
Does Africa have a future in car production, by production I mean : Concept development > design and engineering > manufacturing and assembly > retail and sales.
Factory to Dealer floor to garage.
Not just re-branding and selling Chinese cars.
An African car made by Africa for Africa
What inspired this question is a TV show called Auto Mundial, which has the latest in the car industries developments, the episode I watched this week they featured the Paris Motor show.
There were some show highlights like the Peugeot e-Legend, Renault’s EZ Ultimo, and FERRARI Monza SP1 and SP2 but what really caught my attention was a company called VinFast.
What is VinFast you might ask? It is Vietnam’s first volume car manufacturer. Yes Vietnam
Looking at the car you might wonder what caught my attention? This car maker went from concept and design to fully working car in 12 months!
That is an astronomic pace, that pace is faster then a Telsa going from 0–100 km/h on Ludicrous mode.
Vietnam, a one-party Communist state, has one of south-east Asia’s fastest-growing economies and has set its sights on becoming a developed nation by 2020.
If Vietnam can decide to make a car and 12 months later have two models out on show for the Paris Motor Show then what stops African countries from doing the same.
Why does Africa need to produce cars
- In 2017, around 863,000 passenger cars were sold throughout the continent.
- 42,510,000 vehicle in use in Africa ( OICA 2014)
- Used vehicle market has been estimated at about $60–70 billion in sales worldwide
- Annual vehicle fleet growth rate in Kenya and Ethiopia is 12% and 10% respectively
- In Ethiopia and Nigeria used vehicle imports account for 80% of all vehicle sales( 2016)
- More than 96% of vehicles imported into Kenya are used (2016) • 1:131 ratio of new cars to used in Nigeria (2017)
- Africa imports 4 x more automotive products than it exports
- In 2014, automotive imports valued $48 billion and exports totaled $11 billion.
- In Nigeria internet bases car sales account for 89% of all car sales (2015)
The opportunity is there.
Production ability
BMW opened a plant in South Africa in 1973, the first BMW facility outside Germany. For years it has produced the 3-series for the US market — and most of those seen on the streets of Abu Dhabi too.
BMW Group Plant Rosslyn is currently producing the sixth generation of the 3 Series and is capable of producing up to 75 000 units per annum.
Over 85% of all BMW 3 Series vehicles produced at the Rosslyn plant are destined for BMW markets in the USA, Taiwan, Japan, Singapore, New Zealand, Hong Kong, Australia, Sub-Saharan Africa and Canada.
Mercedes- Benz also has a plant in Africa, the plant in East London is part of the C‑Class global production network whose lead plant is in Bremen. The plant in South Africa’s Eastern Cape province produces C‑Class Sedans for right-hand and left-hand drive markets for export.
In 2018 Automotive manufacturer Mercedes-Benz Cars will invest €600-million, or about R10-billion, to expand its South African subsidiary Mercedes-Benz South Africa’s (MBSA’s) manufacturing plant, in East London, and equip it for the future.
In 2017, Morocco produced 345,000 passenger vehicles, overtaking South Africa, which produced 331,000, as the continent’s biggest producer, according to a report by IOL.
German giant automobile manufacturer Volkswagen is set to construct an assembly plant in Morocco.
So clearly Africa has the manufacturing expertise and capability.
So what is missing?
According to africa-facts.org there are 6 cars produced in Africa
- The Kantanka (Made in Ghana) …
- Innoson (Made in Nigeria) …
- The Kiira EV Smack (Made in Uganda) …
- Mobius Motors (Mobius II — Made in Kenya) …
- The Turtle (Made in Ghana) …
- The Wind and Solar Powered Car (Made In Nigeria)
The Kantanka (Made in Ghana)
The Katanka Automobile Company’s manufacturing plant is located in Gomoa Mpota in the central region of Ghana. The brain behind this invention is the Ghanaian Apostle Kwadwo Safo, the owner of the Kantanka Group of Companies and the Apostle Safo School of Arts and Sciences.
Kantanka’s CEO has admitted to working with a secret Chinese partner, and one Chinese company has already claimed responsibility for Kantanka’s entire factory operation.
Sales
The company started commercial production and sale of vehicles in 2015.
Touching on sales, Mr Kudjorjie (General Manger) said 2018 had been exciting with about 300 vehicles sold so far. Last year, he said the company sold some 400 units locally.
“This year, sales have been good. We have just crossed the first half of the year and we have made 300 sales so far,” he said.
Innoson (Made in Nigeria)
Innoson Vehicle Manufacturing Company, Nigeria are the first technology company to manufacture cars in Nigeria.
Innoson has not less than 500 Nigeria-made cars released for sale at the cost of between N 1.5- N3.5 million.
Millions of Nigerians cannot allow buying a new car because it is too expensive. However, the biggest Nigerian car manufacturer says everyone will be able to purchase a new vehicle for N1.5m (4,500 $)
A large majority of the parts and components are sourced from Nigeria. According to Hoovers INNOSON VEHICLE MANUFACTURING CO. LTD Has an EMPLOYEE Headcount of 1,800 and SALES of (MIL USD)211.72
A report by PWC highlighted Nigeria’s potential to become the automotive hub of Africa.
Mobius Motors (Mobius II — Made in Kenya)
The multi-purpose vehicle which costs about $10,000 was manufactured for Africa’s mass market. Mobius motors are designing around Africa’s common road terrain and transport usage. If you are thinking of getting one of these for yourself, you should know that the eight-seater vehicle has a large cargo space with a loading capacity of up to 625 kg and is capable of reaching a top speed of 160 km/hr on a manually transmitted gear box.
Since the inaugural model Mobius II rolled off the assembly line in late 2014, 50 units were sold by the end of 2015 with Mobius Motors now planning to significantly ramp up production of a more advanced model
This is not Kenya’s first attempt at making a car
From the looks of it the capability is there, the desire is there and the market is there so what is still needed?
Way forward
1-Ban used vehicle imports
Only Egypt, South Africa, Sudan, and Morocco impose a total ban on used vehicle imports. If more countries were to follow-suite this would encourage manufacturing instead of imports.
2-Regulation
Relaxed operating conditions for local car manufacturers including but not limited to custom procedure codes, tax policies to operate, tax waivers.
3-Localization
Car manufacturers need to create cars that the people of Africa can relate to, this can be done by working with local designers and ensuring localization in design and finishes.
4-Product Market fit
If a countries GDP per capita is $1000 and the local car is $20000 then a very low proportion of the locals shall be able to buy the car. The first aim must be to create cars that shall complete with the used cars that are imported from Japan, USA and Europe.
5-Crawl before you can walk
This is the classic Elon Musk master plan part deux where you create a high Margin super/sports car that requires limited volumes in order to achieve profitability then once cash flow is adequate create a mass market car.
Do not start mass market, Tesla themselves have struggled with the mass market offering
So lets build a Car Company, who is with me?
Source
1-wedocs.unep.org : AfricaUsedVehicleReport
2-https://africa-facts.org/6-cars-produced-in-africa-by-africans-for-africa/
3-https://www.bbc.com/news/world-asia-pacific-16567315
4-https://wedocs.unep.org/bitstream/handle/20.500.11822/25233/Brief_PCFVUsedVehicleWorkingGroup.pdf?
5-https://edition.cnn.com/2017/11/14/africa/mobius-made-in-africa-kenya-suv/index.html
