VWGA MD: SSA Auto Industry Poised for Long-Term Growth – International Edition (English)

By Ernest Bako WUBONTO

Given a populace surpassing one billion and a Gross Domestic Product (GDP) over US$1.5 trillion, automotive leader Volkswagen Group Africa (VWGA) envisions substantial long-term expansion within Sub-Saharan Africa (SSA), with the exception of South Africa.

The firm emphasizes that urgent action via strong policies and joint collaborations is necessary to tackle ongoing structural issues and thereby realize this potential.

In 2024, around 1.2 million new vehicles were sold throughout the African continent. Excluding South Africa, which has the most advanced automotive market in the region, Sub-Saharan Africa accounted for just 175,915 of these new vehicle sales. Meanwhile, more than one million second-hand cars were brought into the area within the same timeframe.

This represents a vehicle penetration rate of three vehicles per 100 people, which is very low compared to the world average of 18.2 percent.

The prospects for North Africa’s automobile market were predicted to lead global growth. Given a populace of around 260 million individuals and an economic output of $886 billion, this region saw the sale of 502,369 newly manufactured cars in 2024. In terms of new vehicle purchases during 2024, both Morocco and Egypt ranked as the second and third largest markets respectively.

In the meantime, South Africa, which has a population of 61 million and a GDP of $377 billion, saw sales of 545,000 new vehicles in the preceding year.

The Chairperson and Managing Director of VWGA, Martina Biene, stated that by the end of this century, 13 out of the world’s 20 largest megacities will be located in Africa, compared to only two at present. Additionally, she mentioned that over one-third of the global population will reside in African nations.

Citing these figures, she highlighted that the Volkswagen Group believes there is significant potential for the automotive sector to expand within this area. Consequently, it is crucial for policymakers to work alongside manufacturers to establish an effective new vehicle supply chain. This initiative aims to counteract the present situation where the region serves as a de facto repository for used cars imported globally.

Moreover, she highlighted that creating a unified market through the African Continental Free Trade Area (AfCFTA) will draw more international investments into Africa’s automobile sector.

According to her statement, by 2035, overall exports are projected to grow by 29 percent. This includes an anticipated surge of more than 81 percent in intra-continental shipments, with exports destined for nations outside Africa predicted to climb by 19 percent.

Martina Biene also mentioned that the AfCFTA has the potential to boost infrastructure development throughout Africa, encompassing enhancements to transport systems and logistical facilities.

“By lowering trade barriers, manufacturers can more readily obtain components and parts from various African nations,” she emphasized.

Volkswagen Group believes that the demand for new vehicles in Sub-Saharan Africa could grow dramatically if they can tackle affordability through proper vehicle financing options. Additionally, implementing uniform vehicle standards such as homologation, enhancing fuel quality, enacting policies against importing second-hand cars, and establishing more bilateral trade deals would contribute significantly to this growth.

Challenges Facing New Automobiles in Sub-Saharan Africa

Low-quality fuel substantially harms modern cars, affecting their performance and durability.

Iron and sulfate impurities clog catalytic converters and spark plugs, leading to decreased efficiency and higher emissions.

Premium fuel guarantees efficient burning, which minimizes strain on your engine and stops early deterioration, resulting in better engine performance and durability.

Martina Biene explained that despite being pricier than low-quality alternatives, using cleaner fuel maintains engine efficiency and prolongs the vehicle’s lifespan.

“Although cleaner fuel comes at a higher cost, it preserves engine efficiency, which decreases maintenance expenses and ensures the vehicle has a longer lifespan,” she emphasized.

The lack of standardized automotive policies in most countries across the sub-region continues to be a challenge that independent nations must tackle and resolve.

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