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Car market in Africa before growth spurt

25 January 2021

The President of the Association of African Automobile Manufacturers speaks in an interview about the growth market Africa and the cooperation with the VDA.

Most of the new cars sold in Africa are imported vehicles. However, production on the African continent is to be increased significantly in the future. Morocco already exports more cars than it imports. Rising incomes and high growth rates in gross domestic product will further increase demand. With Mobius Motors, an African manufacturer has been producing off-road vehicles (SUV) in Kenya since 2010. Politicians also support the trend towards buying new vehicles, after Africa had practically become the final resting place and place of use for used vehicles for decades. A number of governments have made the import of new vehicles easier in terms of tax and made it difficult or even banned the import of old cars.

In December 2020, the President of the African Association of Automobile Manufacturers (AAAM) signed a cooperation agreement with the German Association of the Automobile Industry (VDA). The AAAM is the first automobile association with a pan-African approach and was founded in 2015 by global car manufacturers and original parts manufacturers (OEMs). About the cooperation of the CEO of AAAM, Dave Coffey, in an interview.

Mr. Coffey, what does the AAAM want to achieve with the cooperation agreement with the VDA?

The VDA brings a lot of specialist knowledge, resources and a strong network to support the development of automotive policy and ecosystems. They are necessary for effective industrialization and the growth of the automotive sector on the African continent. That is why it is an ideal partnership in which we complement each other. This is a strong alliance.

How can African markets and companies benefit from closer cooperation with the VDA?

We believe the new vehicle market in Africa will grow from 1.1 million units in 2019 to 5 million cars per year by 2035. This growth requires the implementation of an advanced auto policy and ecosystem across the continent. In some countries, vehicles are assembled, supported by the surrounding economies, which participate in the value chain in the manufacture and delivery of components. Ultimately, the vehicles and components are traded in regional markets, within the largest free trade bloc in the world, the AfCFTA. Country and regional partnerships are not new to the development of the automotive industry around the world.

What trends do you see in the African markets?

In Africa there will be a transition on the way to electromobility through alternative drives such as CNG (compressed natural gas), hydrogen, hybrids, e-fuels. Africa is not yet ready for all-electric vehicles and alternative drives will enable African governments to reduce fuel imports and improve the balance of payments. Electric vehicles will be manufactured on a large scale in Africa if local demand supports production.

In the interests of safety, great attention will be paid to ensuring that imported used cars are roadworthy and that their age is limited in order to reduce pollutant emissions. More than 80 percent of all vehicles sold in Africa are imported used cars. While there will be a transition with the industrialization of the automotive sector in Africa, the used cars will ultimately come from vehicles that have been assembled in Africa. This “Made in Africa” ​​trend will have a significant positive impact on the balance of payments, job creation and economic growth.

Much emphasis will be placed on offering affordable mobility. This will include vehicle financing for new and used vehicles along with alternative mobility solutions.

The competition with Chinese automobile manufacturers is getting tougher worldwide. What does that mean for the African markets?

The manufacture of vehicles in Africa must be globally competitive. We have the roadmap to achieve this on the scale that will result from trade between regional markets within the AfCFTA. The newly formed AfCFTA Secretariat has the unique opportunity to shape and advance the necessary continental automotive policy with those countries that are willing to participate. We support that. The development of the automotive industry in Africa will not happen by chance. It requires courageous and conscious leadership in both the public and private sectors. That is exactly what is developing right now.

A key element of the cooperation agreement is vocational training – what needs to be done here?

The VDA will share its expertise from its European experience with employees and players in the automotive value chain in the various African priority countries. The demand for certain technologies or specialist knowledge will flow into the training, for example in the case of alternative drive technologies. If qualification measures are required that go beyond the offerings of the VDA and AAAM, for example in the area of ​​vocational training, expert advisors, including non-profit organizations, are called in. 

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.”

Association of African Automotive Manufacturers (AAAM) takes stock

31 December2020

Association of African Automotive Manufacturers (AAAM) takes stock

AAAM, the only African body focusing on the expansion and deepening of the automotive industry across the continent, would like to thank all their stakeholders for their support and contribution in 2020 despite the challenges of the COVID Pandemic.

Some good progress was made on several fronts including the recruitment of several new members from across Africa. However, the most notable being the implementation of Ghana’s Automotive Development Policy which saw Volkswagen commencing its assembly operation, with both Toyota and Nissan committing to do the same with more announcements to follow in early 2021. First steps were also taken to develop a component supplier industry which will be followed up with a visit to Ghana by a delegation of first tier suppliers in early 2021.

The other being the partnership announced between the German Association of the Automotive Industry (VDA) and the AAAM as part of the “PartnerAfrica” project of the German Federal Ministry for Economic Cooperation and Development (BMZ). As a result of this partnership two project offices have been opened and resourced, one in Accra Ghana and the other in Johannesburg in South Africa; they will support the implementation of the PartnerAfrica project to industrialise and grow the automotive sector in Africa.

“Unfortunately, the pandemic is not going away quickly and 2020 has taught us how to continue working towards our objectives in new ways and I am confident that the groundwork we laid this year will begin to show tangible results not only in Ghana, as we begin to assist in developing a supplier industry, but also in East and North Africa as progressive auto policies and ecosystems are developed in support of regional market integration” said David Coffey, CEO of AAAM. ”It is exciting to experience the strong interest in our Pan African Vision from within and outside of Africa; we will be announcing another significant partnership in the first quarter of 2021. I wish you, your families and your organisations all the very best for 2021. Please take care and stay healthy” concluded Coffey.

AAAM in partnership with VDA Appoint Project Managers

The African Association of Automotive Manufacturers (AAAM) in partnership with the German Association of the Automotive Industry (VDA) is pleased to advise the appointment of two Project Managers that will support the implementation of the “Partner Africa project” between VDA and AAAM to industrialise and grow the automotive sector in Africa. These appointments have been facilitated through the financial support of the German Federal Ministry for Economic Cooperation and Development (BMZ).

Victoria Backhaus-Jerling will be based at the NAACAM (National Association of Automotive Component and Allied Manufacturers) offices in Johannesburg and will lead the engagements between the AAAM and the VDA. Victoria’s recent employment in the German government, along with her knowledge of the German automotive industry and her fluency in both English and German equip her well to coordinate and drive automotive development projects in Africa.

Eugene Sangmortey will be based at the offices of the Delegation of German Industry and Commerce in Ghana (AHK Ghana). Eugene’s engineering background and experience in vehicle dealerships and the after-sales environment position him well to develop the automotive ecosystem in Ghana and the Economic Community of West African States (ECOWAS) region.

“We are privileged to have two such experienced project managers joining the AAAM which will strengthen our African footprint and are grateful that the VDA have partnered with AAAM to assist in our drive to grow the automotive industry on the continent. We welcome Victoria and Eugene and look forward to their valuable contribution to the Partner Africa project”. Commented David Coffey the CEO of AAAM.

“We highly appreciate our partnership with AAAM as the VDA intends to increase its involvement in Africa. With the joint project, VDA and AAAM are pursuing the goal of creating improved conditions for a flourishing automotive industry on the African continent in order to increase welfare in Africa and enable member companies to participate in market growth and foster win-win trade between Europe and Africa. An in-house cluster for the association partnership at VDA’s headquarter in Berlin and two project offices in Africa are now responsible for implementation and supporting direct local contacts for our members and partners. We wish our colleagues much success and are looking forward for the cooperation”, Dr. Scheel, Managing Director of the VDA added.”

There will initially be two project offices – one in Johannesburg which will open in January and the other in Accra which opened on 1st December. Victoria and Eugene will be the contact points for both AAAM and VDA members as well as for public and private stakeholders of the automotive cooperation project.

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Contact email addresses:

Victoria Backhaus-Jerling: jerling@aaamafrica.com
Eugene Sangmortey: etsangmortey@aaamafrica.com

AAAM warns that the 2020 Finance Bill would be the end of the road for Automotive Investment in Nigeria

The Association of African Automotive Manufacturers (AAAM) has been working with the Nigerian Federal Ministry of Industry Trade and Investment through the NADDC on the development of a fully-fledged motor manufacturing industry, enabled by a comprehensive automotive framework which would assist in the industrialisation of Nigeria. This would be scuppered by the 2020 Finance Bill which sees the Customs Service proposing to reduce levies on motor vehicles for the transportation of persons from 35% to 5% and the reduction of duties for the transportation of goods from 35% to 10%.

A critical element of an automotive policy that will drive industrialisation is to sufficiently differentiate tariffs for locally assembled vehicles from tariffs for imported vehicles; should an acceptable level of differentiation not be in place the industrialisation and growth of the automotive sector will not transpire.

“The proposed automotive policy framework requires that the levies/duties be retained at their existing levels with some refinements. The proposed reduction in levies/duties will thus remove any possibility for Nigeria to industrialise and develop the automotive sector” said David Coffey the CEO of AAAM.

“It is in the industrialisation interest of Nigeria to halt the proposed reduction in motor vehicle levies/duties and to effectively implement the proposed automotive policy. The AAAM offers their full support to the Government of Nigeria in the development and implementation of the automotive policy and ecosystem”, concluded Mr Coffey.

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Automotive Trade Show @IATF2021, incorporating the AAAM Forum – 6-12 September 2021 | Kigali | Rwanda

You are invited to trade with Africa’s automotive role players at the continent’s largest automotive meeting place and trade show under the theme:
“Building Bridges for a successful AfCFTA”

The Automotive Tradeshow (exhibition), match-making and African Association of Automotive Manufacturers (AAAM) Forum (seminar) puts a dedicated and intentional focus on trade opportunity in the African automotive sector, where explosive growth opportunities are forecast.

The IATF – which connects the African continent’s policy-makers and business – has underlined its ambition to mobilise the automotive sector in Africa.

Small steps to big market

Africa offers huge opportunity for expansion; but it will take years to unlock fully

Multinational motor companies hoping to develop a sustainable African automotive industry have stopped dreaming of giant leaps forward, in favour of small steps. Volkswagen (VW), Nissan and Toyota are among companies encouraging their SA subsidiaries to create small-scale African joint ventures they hope will eventually reap major benefits. The SA-based African Association of Automotive Manufacturers (AAAM), meanwhile, is helping persuade governments to lift trade and other restrictions that inhibit development of a regional industry

GB Auto – Egypt’s leading Automotive Group Joins AAAM

The Association of African Automotive Manufacturers (AAAM) is proud to welcome Egypt’s leading automotive group GB Auto, as its first North African member.

The GB Auto Group is an Egyptian based public listed company with over 60 years of accumulated experience, operating across the complete automotive value chain including the manufacturing, distribution and sales of cars, buses, trucks, construction equipment, three-wheelers and motorcycles, combined with aftermarket service operations, as well as non-banking financial services.

“With a rich, diversified business portfolio and footprint across the region, we strive to embody excellence in every aspect of our business. With our diverse human capital who compile years of experience in their field of expertise, GB Auto Group occupies a remarkable leadership in the markets it operates in”, said Dr Raouf Ghabbour Chairman and Chief Executive Officer of GB Auto. “Joining AAAM will allow us to embark on a mutually beneficial relationship with AAAM as we continue to grow and learn from each other”, added Dr Ghabbour.

AAAM is the only African body, focusing on the expansion and deepening of the automotive industry across the continent, by working with governments to shape and implement policies that will attract investors. Thereby unlocking the economic potential of the continent and aligning a global network of stakeholders committed to the development of the Automotive industry in Africa.

AAAM recently hosted the Auto Forum with participants from Africa and around the world to discuss the future of the automotive industry and its potential in Africa, and what is required from all stakeholders, including governments, to develop a flourishing industry which would create thousands of jobs and economic benefits. “Having GB Auto join AAAM confirms that our vision is indeed an African one as was well articulated during the Auto Forum” said David Coffey the CEO of AAAM.

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MOTUS joins AAAM

The Association of African Automotive Manufacturers (AAAM) is pleased to be able to welcome Motus Africa as its latest member.

Motus Africa is a subsidiary of Motus Holdings Ltd. a diversified non-manufacturing business in the automotive sector with unrivalled scale and scope in South Africa, and a selected international presence mainly in the United Kingdom and Australia and a presence in South East Asia, and Southern and East Africa.

“As Motus Africa, we believe that there are many untapped opportunities to expand our business in Africa and AAAM’s approach to developing the industry through consultation and its regional hub and spoke model, makes for an ideal partner in achieving this.” commented Tim Jaques, Chief Executive Officer of Motus Africa.

AAAM is the only African body, focusing on the expansion and deepening of the automotive industry across the continent, by working with governments to shape and implement policies that will attract investors. Thereby unlocking the economic potential of the continent and aligning a global network of stakeholders committed to the development of the Automotive industry in Africa.

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AAAM appoints Markus Thill as second Vice President

At a recent Board Meeting of the African Association of Automotive Manufacturers (AAAM) it was agreed that a second Vice President representing the component manufacturing industry be appointed. This sector is a very important part of AAAM’s automotive development vision for Africa. The current President is Mike Whitfield from Nissan and the current Vice President is Andrew Kirby from Toyota, the new the second Vice President is Dr Markus Thill from Bosch. Office bearers of AAAM are elected on an annual basis.

Mobility Solutions is the largest Bosch Group business sector. It generated sales of 46.8 billion euros in 2019, and thus contributed 60 percent of total sales from operations. This makes the Bosch Group one of the leading automotive suppliers. The Mobility Solutions business sector pursues a vision of mobility that is safe, sustainable, and exciting, and combines the group’s expertise in the domains of personalization, automation, electrification, and connectivity. For its customers, the outcome is integrated mobility solutions. The business sector’s main areas of activity are injection technology and powertrain peripherals for internal-combustion engines, diverse solutions for powertrain electrification, vehicle safety systems, driver-assistance and automated functions, technology for user-friendly infotainment as well as vehicle-to-vehicle and vehicle-to-infrastructure communication, repair-shop concepts, and technology and services for the automotive aftermarket. Bosch is synonymous with important automotive innovations, such as electronic engine management, the ESP anti-skid system, and common-rail diesel technology. Dr. Thill, President Region Africa of Bosch, holds degrees in mathematics and physics, including a doctorate from Université de Paris, and has been responsible for Bosch’s business in Africa since 2014.

David Coffey CEO of AAAM thanked Dr Thill for his valuable contribution to AAAM to date and for accepting his new role as Vice President. He added, “Markus’ passion for developing a significant and sustainable automotive industry in Africa is clearly evident in the awareness and support that he has already gathered around the world for our Pan African Auto Pact Vision”.

The AAAM was established in November 2015. It is the only African body focusing on the expansion and deepening of the automotive industry across the continent, by working with governments to shape and implement policies that will attract investors, unlock the economic potential and align a global network of stakeholders committed to the development of the automotive industry in Africa.

“A sustainable manufacturing automotive industry in Africa is essential for the successful industrialisation of Africa, components will play a key role in this going forward and I am convinced that the AAAM’s vision and approach is the way to achieve this. I am therefore delighted to be able to continue playing a key role in realizing this vision as the Vice President representing the component sector”, said Dr Thill.

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