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Manufacturing industry: Made in Africa

Manufacturing industry: Made in Africa

Kenya moves ahead
On the other side of the continent, the local assembly of cars has rocketed in Kenya, as automobile firms seek to circumvent the 25% duty on imported motors. According to figures from the Kenya National Bureau of Statistics, over half of the country’s new cars are assembled in Kenya. In the 10 months to October 2012, 5,456 vehicles out of 10,422 were assembled in the country – about 52% of the total. That is compared with 5,106 vehicles, or 48% of the total in 2011.

In 2013, a Kenyan company also started assembling the Mobius, a car with a $6,000 price tag originally – which would have made it Africa’s cheapest car, but the price of spare parts pushed it up to $11,000. The firm is working on the vehicle at the Kenya Vehicle Manufacturers in Thika, central Kenya. It aims to produce over 50 units from the middle of this year. The car’s low price is down to the fact that it comes without many extras including power steering and air conditioning.

Ethiopia, meanwhile, aims to fully manufacture a car in the country by 2015. Chinese auto company Lifan has claimed in the past that it wants to double assembly capacity in Ethiopia. In 2012, it announced plans to open a new plant the following year with an annual capacity of up to 2,000 units. However, the country faces considerable obstacles in terms of government regulation, poor road infrastructure, a dearth of adequately trained workers for the industry and poor access to finance, according to some observers.

In conclusion, Africa’s auto markets and auto manufacturing sectors have great potential but are also facing tricky times. The market for automobiles in Africa is growing but the race is on for car manufacturers to offer competitively priced, sturdy, good-value products. Indian and Chinese car makers could lend serious competition to the world’s leading – and mainly European and Japanese – car makers in this regard.

With the number of wealthy people growing on the African continent, the market for luxury cars is inevitably swelling. Nonetheless, competition from second-hand luxury-car dealers may become a sticking point as markets mature. In terms of manufacturing, Nigeria and Kenya are both hopeful that they can establish car-making traditions in their countries. South Africa’s manufacturing sector has certainly improved over the years but labour disputes and other challenges mean that it is facing a tough period. Finally, the growth of the car industry also means the expansion of other industries. GPS makers are, for example, profiting from the growing market for cars.

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Written by African Business Magazine

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