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Volkswagen, BMW and Mercedes Benz – German carmakers see huge potential in African market

Volkswagen, BMW and Mercedes Benz – German carmakers see huge potential in African market

In 2019 nearly 870,000 new passenger cars were sold in Africa, 62,000 of which were exported directly from Germany to Africa. However, South Africa remained the single most important market taking up nearly half of all German exports.

On the production side, the continent as a whole produced around 787,000 passenger car with 349,000 or 44% of these units manufactured in South Africa. German carmakers based in South Africa produced 317,000 passenger cars in 2019 indicating that just over 90% of all passenger cars manufactured in South Africa is done by German carmakers.

As a result, German automotive original equipment manufacturers (OEMs) see the African continent as a combined market with enormous potential future growth. Building on this assessment, the German Association of the Automotive Industry (VDA) has just joined hands with the African Association of Automotive Manufacturers as part of the PartnerAfrica project promoted by the German Government.

President of the German automotive association, Hildegard Müller, said “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 economic growth and welfare in Africa and enable German as well as African member companies to participate in market growth and foster win-win trade and investments between Europe and Africa.”

“This commitment of the VDA and AAAM is a significant contribution to growth and prosperity in Africa, supported by the investments of car manufacturers and suppliers on this emerging continent,” she continued.

An in-house cluster for the association partnership at the VDs headquarters in Berlin and two project offices in South Africa and Ghana are now responsible for project implementation and supporting direct local contacts for members and partners.

The partnership will not focus solely on car manufacturing, it will also cover areas such as energy, e-fuels and digital mobility with the ultimate goal to strengthen local development, increase trade volumes, boost investment and opening market access for both manufacturers and suppliers.

The long-term goals are based on the assessment that the continent’s current average vehicle ownership is only 45 vehicles per 1000 persons, considerably lower than the global average of 203 vehicles per 1000 persons.

The estimated sales forecast of new light vehicles in Africa will be 1.8 million in 2027. This is double the market volume of 2019. Dave Coffey, the Chief Executive of AAAM said “Our experts estimate that the African new vehicle market can initially grow to 3 million by 2035, with the potential of 5 million, by implementing effective automotive policies and ecosystems. We are excited about our partnership with the VDA as it will provide expertise, resources and a strong network that will facilitate the development of the automotive industry in Africa.”

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