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Entrepreneurs in Nigeria, Kenya and elsewhere are creating a homegrown auto industry, and it’s built for Africa.
Africa’s auto industry certainly has a lot of room for expansion. The continent has the lowest number of vehicles per person in the world (43 per 1,000 people in 2013). A growing middle class means that demand for vehicles is rising. From 2005 to 2013 the number of cars and trucks in use in Africa surged by more than a third to 40.3 million.
Africa’s auto industry certainly has a lot of room for expansion. The continent has the lowest number of vehicles per person in the world (43 per 1,000 people in 2013).
South Africa, Morocco and Egypt have thriving vehicle assembly and manufacturing industries producing Toyotas, Volkswagens, BMWs and other marques for global consumers. But the rest of Africa has very little commercial production and African car brands have made no impact at all on the regional market, reflecting the manufacturing malaise that has afflicted much of the continent. Entrepreneurs in Nigeria, Ghana, Kenya and Uganda now aim to meet local demand for cars with products that are developed and built in Africa, for the African market.
Developed-and-made-in-Africa vehicle projects have often been seen as expensive white elephants. In the 1980s Kenya’s president Daniel Arap Moi asked the University of Nairobi to build a car, “no matter how ugly or slow it may be.” The Nyayo Pioneer was finished in 1990, but was never mass produced and cost Kenyan taxpayers more than $10 million.
The Nyayo Pioneer and similar projects appealed more to national pride than economic principles. Such initiatives often failed because of high production costs and a lack of demand for new vehicles. The new breed of African vehicle manufacturers is overcoming these obstacles and attracting both investment and customers. ABC looks at the car companies that stand out and what is making them successful.
INNOSON VEHICLE MANUFACTURING
Nigeria’s Innoson Vehicle Manufacturing (IVM) markets itself as the country’s first indigenous auto manufacturer. IVM was set up in 2007, opened its first plant in 2010, and sells buses, trucks, SUVs and cars that are made in Nigeria. According to group founder Innocent Chukwuma, at least 50 percent of the vehicles’ components are locally sourced. The company also has a factory to process rubber. At the end of November last year, IVM unveiled the first 500 passenger cars produced at its plant in Anambra state. Priced at between $7,500 and $13,000, IVM’s cars can compete with international models. “Made in Nigeria” is a strong selling point, but IVM is now proving that its vehicles can stand up to more established brands in cost, appearance and quality, and make an impact in its home market. And as the market for new cars in Nigeria grows, banks are increasingly offering finance to help buyers get on the road.
Hybrid electric vehicles are very rare in Africa. Uganda’s Kiira Motors Corporation hopes this will change. Developed by the Makerere University College of Engineering, Design, Art and Technology, the first Kiira electric car (the Kiira EV) was unveiled by President Yoweri Museveni in Kampala in 2011. In November last year, the EV’s successor, the EV Smack, went on show in Nairobi. The five-door sedan combines petrol and electric engines and is expected to go on sale in 2018.
Kiira is targeting high-end government and corporate buyers, with a price tag of $20,000. The company has a realistic approach to supply chain issues and funding. If it succeeds in producing and selling the EV Smack, Kiira will not only have produced East Africa’s first locally made, commercially viable sedan, but it will have introduced a new technology segment to the continent.
Kenya’s Mobius II will remind many of an early generation Land Rover – simple, rugged and built for purpose. This SUV is designed to be the cheapest new car in Kenya and at $10,000 before VAT, it fills a unique niche in the market. According to Mobius Motors, the Mobius II vehicle costs about the same as a seven-year old sedan, but is designed for the rough roads of East Africa and the heavy loads that its drivers transport. The target market is small business owners. A 1.6-liter petrol engine, heavy-duty components and chassis, and no-frills interior make the SUV cheap and reliable.
The company has already attracted funding from local group Chandaria Industries and American billionaire Ronald Lauder, and was due to deliver the first 50 vehicles to buyers in December last year. The SUV is assembled by Kenya Vehicle Manufacturers in Thika. Production will increase in 2015, as the company sets up distribution points around Kenya.