Gabon Autos Report Q3 2012

A 23% year-on-year (y-o-y) increase in new vehicle sales in Gabon during 2011 falls closely in line with BMI's expectations of a 25% growth in sales during the year and marks a strong recovery after three consecutive years of contraction between 2008 and 2010. In addition to the strength of the economy, the robust growth partly came on the back of increased demand from government agencies and businesses ahead of the Africa Cup of Nations football tournament 2012.

However, with much of the vehicle demand being met during 2011 and 2012, we believe that vehicle sales growth will moderate at an average of 9% y-o-y between 2013 and 2016, taking 2016 market sales to 7,800 units.

We warn that there could be downside risks to our outlook if demand gets dampened by the slowing economic growth in the country. Our Macroeconomic team is currently forecasting Gabon's real GDP growth to slow down to 3.0% in 2012 and just 1.7% in 2013 - after growth of 5.6% each year between 2010 and 2011 - as oil production declines.

One of Gabon's key strengths is that the participation of the household sector in the new vehicle market is very low. While this could be an impediment for vehicle sales growth in the short and medium term, it positions Gabon as a market with strong long term potential. For the short term, we believe the scene is set for good growth in commercial vehicle sales on the back of infrastructure projects in the country.

Meanwhile, the Emerging Gabon diversification strategy announced by President Ali Bongo Odimba will also bring good demand potential for the commercial vehicles segment. BMI currently tips manganese mining, timber and tourism as three areas that could benefit from the diversification push. All of these factors rank Gabon fourth in BMI's Risk/Reward Ratings for the autos industry in Africa, lagging behind its bigger regional rivals South Africa, Nigeria and Botswana. As of now, we do not see any scope for Gabon to overtake its rivals, as Gabon will remain constrained by the relatively small size of its new vehicles market and the uncertainties surrounding the progress of its economic diversification strategy.

The competitive landscape is largely dominated by Japanese brands which together occupy almost 80% of the market. Estimates from the Union of Automotive Industry Representatives (Urai) revealed that Toyota Motor remained the dominant player in the market with sales of 1,945 vehicles and a market share of 32% during 2011. The Japanese carmaker was followed by Mitsubishi (which sold 1,012 units), Hyundai (544 units), Nissan Motor (359 units) and Mazda (331 units).