The largest assembler of vehicles in Africa is South Africa but statistically, little has changed in the production capacity, though companies like Ford have blueprints for churning out double figures of single units, year-by-year, up to 2016. However, local materials only figure at 35 percent of South Africa’s total vehicle output. Now, with Nigeria waiting on the sidelines to make it as the continent’s largest exporting base for locally-made cars in the next three years, what stakes are there that this will, indeed, turn up correct?
The South Africa context needs first illumination. Almost all major global brands have made a stint here including the German BMW South Africa which has a 2.2-billion Rand investment in the country that one can trace to 2009. This brings into focus Volkswagen, whose operational status in SA gained momentum, July 2012, when it signed an agreement with an engine maker in the Orient for delivery of twelve thousand units of the machinery.
The above two examples show the commendable presence of worldly brands that leave a local mark in their respective expatriate economies, but at the end of the day, besides the meager showing of local ingredients in the spares department, are there any capital gains that are apparent?
Now, the fiscal arrangement formula is like this: South Africa makes autos that are 20 percent dearer in price than those from traditional European markets like the UK, France and Germany. This does not yet paint the picture quite correctly for the African buyer who has a soft spot for hulls and keels from India, China, Japan, all low-cost brand destinations. Analysts show that a South African make goes for 30 to 40 percent more bucks than its Foton, Toyota or Honda counterpart from Asia and Far-east sources.
The Nigeria case is rather heartwarming because the local auto industry is becoming multinational in its own right despite being a maximum Western brand affair. Take the example of Peugeot, which, via its local plant in Q1-2012, managed to assemble three thousand cars at inception, before going on to deliver seven thousand more, per annum, in the West African economic bloc, as a whole. This is the kind of expansion the continent ought to uphold albeit its foundation comes from secondary facilitators with subsidiary interests there.
The flip side of the coin is not impressive at all. Despite the hearty welcome of Peugeot into its ranks, Nigeria’s story is lukewarm at best: it still coughs up $3.5 billion per annum to succor for the eighty thousand new, and two hundred thousand used cars.
The government, however, is looking up to its economic plan that will embrace the automotive sector. Now, it will become impossible to import a car that is more than half a decade since its production. This goes well with an economy that wants to unshackle itself from dependence on unnecessary secondhand machines that throttle their engines for a flicker of a period and then turn into scrap metal.
Secondly, Nigeria is also earnestly impounding on unscrupulous vehicle importation by making sure that the imports go through registration parameters that ensure only the right vehicles are on the road.
Thus, is it feasible that Nigeria will realize its dream of delivering two million vehicles by the year 2016 in a timely fashion and be Africa’s largest assembly land? Or will South Africa by then have reduced its heavy price tag? Only time will tell.
But before this reality turns out to be either true or false, governments have to run a branding campaign that makes local makes popular to the local imagination. Statistics show that unlike before, now that Africa countries have more vehicles on their local assemblies, the population has abandoned them. It is more prestigious to purchase a second hand car from Japan, for brand’s sake perhaps. A brand thing?