The German automotive industry looks to Africa

25 January 2021

The Association of the German Automotive Industry has agreed a more intensive cooperation with its African counterpart. This is intended to strengthen the auto markets in Africa.

Africa is currently still a comparatively small and in many places difficult market for the industry. However, the African Association of Automotive Manufacturers (AAAM) expects sales to rise from around 1.1 million cars currently to more than five million new vehicles per year by 2035. That would mean a five-fold increase in sales within the next 15 years. “This growth requires the implementation of an advanced auto policy and an ecosystem across the continent,” said Dave Coffey, CEO of the AAAM, in an interview with the GTAI . “In some countries as regional centers, vehicles are assembled, supported by the surrounding economies that participate in the value chain in the manufacture and delivery of components.”

The International Organization of Motor Vehicle Manufacturers (OICA) quantified automobile sales in 2019 at around 870,000 cars, slightly lower than the AAAM. According to the OICA, the most important sales markets were South Africa (355,000 cars), Morocco (148,000) and Egypt (126,000) as well as Algeria (119,000). German carmakers sold around 69,000 vehicles on the continent in 2019. The most important market for the German manufacturers is South Africa, where Volkswagen alone sold 51,000 VW Polos.

German carmakers produce more locally

The activities of international automotive groups in Africa have increased in recent years. Volkswagen has been assembling the Passat, Polo and Tiguan models at its sixth production site on the continent in Ghana, West Africa. In addition to production in South Africa, which has been in existence since 1951, with an annual capacity of 170,000 vehicles, VW also assembles cars in Algeria, Kenya, Nigeria and Rwanda. Mercedes-Benz has also been producing their models locally in South Africa since the late 1950s and BMW since the late 1960s. A large part of the production of the two premium manufacturers is exported. Other international manufacturers also operate car plants in Egypt, Kenya, Morocco and Nigeria. German suppliers such as Bosch, Continental, Leoni and ZF also produce in Africa.

Cooperation for more local added value

With the cooperation agreed at the end of 2020, AAAM and the German Association of the German Automotive Industry (VDA) want to contribute not least to more growth and prosperity in Africa. The cooperation was therefore also created in the “PartnerAfrika” project of the Federal Ministry for Economic Cooperation and Development (BMZ). VDA President Hildegard Müller said that the aim was to enable both German and African companies to participate in market growth and achieve win-win situations in trade and investment between Europe and Africa. “With the joint project, VDA and AAAM are pursuing the goal of improving the conditions for a flourishing automotive industry on the African continent in order to increase economic growth and prosperity in Africa.”