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The push to develop a viable African automotive sector

Jeff Nemeth, Chairman of The African Association of Automotive Manufacturers
Jeff Nemeth, Chairman of AAAM.

The African Association of Automotive Manufacturers (AAAM) was inaugurated on 25 November 2015 by founding members BMW, Ford, General Motors, Nissan, Toyota and Volkswagen, focusing on key markets of the African continent.

“The aim of the African Association of Automotive Manufacturers is to unlock the economic potential of the African continent by promoting a policy environment that is conducive to the development of the automotive sector,” says Jeff Nemeth, Chairman of African Association of Automotive Manufacturers, as well as President and CEO of Ford Motor Company Sub-Saharan Africa Region.

In August a delegation led by Nemeth visited Nigeria to engage with the government, including high-level discussions with President Muhammadu Buhari, along with government ministers, industry leaders, and representatives from Nigeria’s National Automotive Design and Development Council (NADDC), and the National Automotive Manufacturers’ Association (NAMA).

The aim of the visit was to create the framework for policy development to support the growth of the local industry

Outside of South Africa, which has a well-developed world-class automotive industry, Nigeria is being recognised as a strategic market over the long term due to its demographics.

However, Nigeria’s automotive sector is relatively small, with an estimated 44 vehicles per 1 000 inhabitants, according to Deloitte Africa’s Automotive Insights, published in April.

“This is far below the global average of 180 vehicles per 1 000 inhabitants, and lower than other developing regions such as Latin America (176) and Asia, Oceania and the Middle East (79),” the report indicates.

“One of the biggest challenges we face in Africa is the lack of reliable data on the number of new and second-hand vehicles sold on the continent, as very few countries have formal reporting or legislative structures to monitor the automotive sector,” Nemeth adds. “This is exacerbated by the large number of second-hand imports, with only a small proportion of new vehicles sold due to the high import duties and lack of affordable financing options.”

The African Association of Automotive Manufacturers’ mandate, thus, is to engage with government, industry bodies and representatives from the motor sector to provide advice on opportunities to formalise, develop and grow all aspects of the local automotive industry

This includes promoting an investor- friendly regulatory framework that will support the development and implementation of policies to establish a viable automotive manufacturing industry on the continent that includes both assemblers and suppliers.

“To unlock this market potential will require greater government and private sector partnerships to develop a formal legislative environment that is conducive to longer-term growth. It needs a more robust automotive strategy that promotes a sustainable and stable environment in support of local manufacturing operations,” Nemeth says.


Tristan Wiggill
Special Features Editor at Business Fleet Africa