aw_Ausgabe_2_2018

Afrika.Verein

∙ AFRIKA WIRTSCHAFT ∙ FEATURED TOPIC ∙

15

rior to the 1980s, there was no real automotive industry to

speak of in China. However, the country has been the world’s

largest producer of cars since 2008. At the beginning of

the 1990s, China was producing around 500,000 cars a year,

but last year this figure was a staggering 28 million. Chinese

gross domestic product quadrupled in the same period of

time, increasing from USD 360 billion to USD 11.2 trillion. The

industrialisation of the automotive industry has created millions

of jobs. The industry has also made a significant contribution

to economic growth, and brought about increasing wages and

rapid urbanisation. In addition, it has managed to get more

and more of the Chinese public behind the wheel: in

2017, China represented the world’s largest automotive

market, with 24.7 million passenger cars and 4.2 million

commercial vehicles sold. Development of the automotive

industry has had similar effects in South Korea,

India, and Brazil. “If a nation’s people can create and

manufacture cars, they can create and manufacture

anything”, claims Edward T. Hightower, who worked

for more than 20 years as an engineer and manager

at General Motors, Ford, and BMW, and recently had his book

Motoring Africa published.

Afrika, das letzte Neuland der Autobauer (“Africa, the last

uncharted territory for automakers”) was the headline run three

years ago by the Handelsblatt in an article on Africa’s need to

catch up in the automotive industry. Of the 97 million vehicles

produced around the world last year, only 1.1 million came from

Africa – mostly from South Africa and Morocco. In addition,

the level of vehicle ownership on the African continent is still

extremely low: according to the International Organization of

Motor Vehicle Manufacturers (OICA), only 50 out of every 1,000

Africans own a car. In contrast, in the United States, 800 out of

every 1,000 residents are vehicle owners. With over 368,000

new cars sold last year, South Africa easily tops the rankings

of African car sellers. Still, for the same year, 3.44 million new

cars were registered in Germany – almost ten times the amount

in South Africa.

However, the trend is changing – between

2005 and 2015, the number of cars sold on the

African continent increased by 50 percent – and

the automotive industry is reacting. Mercedes

Benz, BMW, Volkswagen, Renault-Nissan, Toyota,

General Motors and Ford have been producing

in South Africa for decades, and there are also

truck manufacturers such as MAN. In the supplier

sector, there are around 500 companies operating

in South Africa alone. And what works on a large scale in

China, also works in the African auto pioneers of South Africa

and Morocco. According to the OICA, in 2016, South Africa

produced 600,000 vehicles, and Morocco produced 345,000.

Both countries profit from the growing automotive industry, and

the Moroccan government plans to have production ramp up

to a million cars per year in the near future. The North African

country has managed to attract investors with low wages and

labour costs, and the growing automotive production should

also draw suppliers.

Between

2005 and 2015,

the number of cars

sold on the African

continent increased

by 50 percent.

AFRICA INCREASINGLY IN FOCUS

Although South Africa and Morocco are the undisputed leaders

of the African automotive industry, there is a lot happening in

many other countries as well. Automakers and suppliers are

watching the growing markets in Africa with increasing interest.

Low rates of vehicle ownership, a growing middle class, and

low competition are catching the eyes of an increasing number

of companies. The African free trade agreement signed in

March lowers internal tariffs and is intended to boost

trade – it can be hoped that it will result in increased

foreign investment across the continent, including in

the automotive industry.

At the beginning of the year, Volkswagen founded

Mobility Solutions in Rwanda. With app-based services,

the group wants to do more than just achieve

value creation – it wants to increase mobility in the

East African country, initially in the form of private carsharing and

ride-hailing. From summer, up to 5,000 cars will be assembled

per year in the capital city of Kigali, and will result in 500 to

1,000 jobs being created by Volkswagen to start with. The initial

investment amount totals USD 20 million. The corresponding

app is being programmed by a Rwandan start-up. “We want to

take a new approach to things here and try a solution different

to the traditional business model of building cars and selling

cars”, said Thomas Schäfer, Chairman and Managing Director

of Volkswagen Group South Africa in discussion with the German-African

Business Association. “Of the 1.2 billion people

living in Africa, a maximum of two to three million can afford a

new car. However, the number of people that have two, five, or

ten dollars in their pocket, and need to get from A to B ranges

in the high hundreds of millions.”, reported Schäfer, who is responsible

for the Sub-Saharan region, comprising 49 countries

and 920 million people. There is presently next to no competition

in Rwanda. To get to work, the doctor, or a restaurant, most

Rwandans take motorcycle taxis. Most of the cars

on the country’s streets are expensively imported

used cars, mainly from Japan.

In its plans to bring carsharing to Africa, Volkswagen

is also receiving support from the German

federal government. At the end of February, Gerd

Müller, German Federal Minister of Economic Cooperation

and Development, gave the green light

to a first mobility initiative in Kigali involving the

Rwandan government, Volkswagen, Siemens, SAP, and the

mid-sized Inros Lackner, a Rostock-based engineering firm. “We

can contribute our expertise in the field of extending individual

mobility to digital, intelligent, and smart solutions in logistics”,

“Automobile production is a compelling approach to

meeting the mobility needs of Africa’s emerging middle class,

while building profitable companies and creating jobs”, says

Edward T. Hightower. © Edward T. Hightower,

Motoring Ventures LLC

_2/2018

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