Africa Automotive Market - Segmented by Vehicle and Geography - Growth, Trends, and Forecast (2018 - 2023)
The Africa automotive market is expected to register a CAGR of about 7.48% over the forecast period. This market is the most underdeveloped automobile market in the world. Apart from South Africa and other small countries, the Africa automotive market is one of the slow growing markets, globally. The major reasons for this limited growth have been the extremely low-average income and the lack of a sizeable middle-class population. Also, the extremely high lending rates have made ownership of a car restricted only to the wealthy and prosperous. Ghana, a promising market, has a car loan interest rate of nearly 26%. This makes taking out a car loan an expensive proposition, which is derailing the automotive market in the country. Even the biggest economy of Africa, Nigeria has a loan interest rate of about 12%.
Market Opportunities in Africa
The African market has great growth prospects. The market is expected to offer high returns to players who are willing to seriously enter the region. Mahindra & Mahindra Group of India, primarily a maker of sports utility vehicles, has set up a manufacturing facility in Ghana to serve the West African market, due to the rising middle-class population in the region. Post-2020, the Africa automotive market is expected to become a luxury and start being a necessity.
The level of infrastructure is also increasing in Africa, which is likely to aid the automotive market of the region. West Africa is expected to drive the growth till 2023, whereas Ghana and Nigeria are expected to be the key players. Ghana aims to become a developed country by 2030, and even if the target is met halfway, the Ghanaian automotive market is anticipated to grow at a tremendous pace, as the economic growth is directly proportional to the growth of automotive markets. The economies of Kenya and Tanzania are also undergoing rapid growth, moreover, the automobile industries in these countries are expected to witness good growth rates.
The North Africa automotive market has been majorly affected by the unrest and has contracted since 2010. The Egyptian market, in particular, has a significant growth potential and is expected to fuel up the Northern African market over the forecast period. The passenger vehicles segment is likely to grow at the fastest rate in Africa, with increasing number of middle-class population aspiring and seeking to own a vehicle. Local auto brands have a good presence in the African market, which can offer strong marketing prospects and significant market shares to the global giants.
Key Developments in the Market