Automobile Sales in Africa 2022
The 23.1% yearly growth of the global automobile industry between 2000 and 2019 may be over due to various disruptions from 2019 to the present. Disruptors include the pandemic-imposed restrictions, chip shortages, inflationary crisis, and the consequence of Brexit and the Russia and Ukraine crisis.
Global automobile sales dipped again in 2022 after recovering 2.9% in 2021 from 63.8% in 2020. Toyota, leading automobile sales in Q1 2022, lost 0.33%, followed by Volkswagen Group and Mitsubishi after losing 1.1% and 1.22% each.?
However, few African countries defied this decrease in car sales trend. Africa's new vehicle sales recovered by 32% as of June 2022, with Northern and Southern Africa topping the list due to growing government initiatives and ride-sharing mobility.
Despite the flood that affected automobile plants in South Africa, including Toyota South Africa Motors, South Africa recorded a sale of 20,577 vehicles, an increase of 13.7% compared to 2021. And Nigeria sold about 5,179 units as of June, an increase of 0.7%. In contrast, Kenya and Morocco's vehicle sales dropped by 38% and 21.34%, respectively.
With the global electric vehicle market, Africa remains the lowest. Out of 12 million cars, South Africa, which has the most developed e-mobility market in Africa, will have roughly 1,000 electric vehicles (EVs) in 2022. Kenya, with an estimated 2.2 million registered vehicles, has 350 electric vehicles only. In Nigeria Q1 and Q2 2022, electric vehicle sales rose by 0.8% and 1.0%, respectively.
?According to Statista, the global automobile industry will regain at least 10% by 2023, based on the transition to sustainable mobility and the increasing need for automobiles across countries. The automotive sector remains a crucial contributor to countries' economies, as the industry contributes up to 3% to the global gross domestic product amidst inflation and shortages.?
Factors Necessitating Automobile Sales In Africa
The unequal rate of automobile sales in Africa in 2022 can be associated with some factors, and they include:
The African ride-hailing services market is expected to grow at a CAGR of 9.0% from 2021 due to its fast adoption and proliferation across African countries. Uber, one of the first ride-hailing companies in Africa, reached a record of 1 billion rides in 2022. Bolt has tripled its customers to over a hundred million and added 2 million new drivers to the platform. African-centered ride-hailing startups (SafeBoda, Plentywaka, SolarTaxi, etc.) have also recorded notable achievements, such as startup funding, strategic partnerships, and an increasing customer database.
These services promote vehicle ownership and ultimately boost automobile sales.
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2. Digitization of Africa's logistic sector
According to Fitch Solutions, the rise of new e-logistics startups like Sendy, Lori Systems, and Kobo360 promotes greater demand for and sales of commercial vehicles. This also aids the digitization of logistics as a business.
3. Growing Government Initiatives
Several African governments have taken remarkable steps towards a more structured automobile industry since the formation of the Association of African Automotive Manufacturers (AAAM).
There are favourable reforms and policies, such as a tax holiday and duty exemptions of up to 10 years for car companies that set up a local assembly plant in Nigeria, Kenya, and Ghana.
There is an increase in government infrastructure, such as roads, electric car chargers, and so on, to facilitate transportation across African countries. Morocco has installed the largest electric charging network in Africa, with 688 electric vehicles on its roads, as South Africa, Kenya, and Uganda attracted more investments in electric charging stations.
?There have also been strategic partnerships and free trade agreements. Nigeria partnered with Israel and Japan to assemble electric vehicles by 2023. This strategic partnership is similar to that of other African countries.
3. Competition among automobile makers and retailers
Automakers and retailers compete with various marketing strategies and automobile models to improve automobile sales in 2022.
This strategy includes the shift to electric vehicles and auto finance, allowing prospective customers to buy a car and spread payment for a period. Though Africa is yet to reach Europe's 92% auto finance level, about 5% of African automobiles are auto-financed.?
This has proven effective across the African automobile market.
4. Regionalisation and online sales bring automakers and retailers closer to prospective customers. And as such, it enhances the brand experience and sales.
Conclusively, the African automotive market is controlled by various macroeconomics biting deeply into its growth like other automobile markets. However, some indicators point to its earliest rebound in 2023.?