With one of the world´s fastest-growing middle classes, Africa shows promise for the global automotive industry, according to analysis from IHS Automotive.

Demand for new light vehicles (gross vehicle weight (GVW) of up to six tons) has consistently reached more than 1.6 million units since 2012 and is forecast to grow to almost 2.7 million units sold annually by 2027, IHS says. For medium/heavy trucks and buses, volume is forecast to almost double between 2012 and 2027.

Numerous factors are driving this growth on a continent that the industry considers to be the “final automotive frontier.” While economic development is stemming from agricultural exports and mining of natural resources, investment in infrastructure and foreign direct investment, regional integration is resulting in evolving trade relationships.

Walt Madeira, IHS Walt Madeira, IHS Key automotive-specific factors are fueling this growth as well, including the fact that several African governments led by South Africa and followed by countries in North Africa are developing automotive industry development plans in an attempt to spur employment and economic expansion.

Finally, the majority of African countries are looking to restrict or ban used vehicle imports that fail to pass basic safety and environmental standards tests. This development is expected to result in significant opportunity for auto sales in the region.

“From a light vehicle perspective, just a couple of countries in Africa are expected to see double-digit annual growth by 2027,” says Walt Madeira, senior analyst, light vehicle sales forecast at IHS Automotive. “While volumes continue to be small in most countries, Nigeria is a notable exception with a double-digit growth rate and volume forecast to about 260,000 units in 2027,” he says.

So far, South Africa has ranked as the single biggest market on the continent, according to IHS Automotive analysis. That continues to be the case. In terms of current market size, South Africa leads, with Algeria close behind, both with more than a half million vehicles sold annually by 2027.

“However, we expect South Africa´s share of the market in Africa to gradually decrease from almost 40% in 2011 to 32% in 2027, as other countries including Nigeria and Angola are showing more pronounced growth,” he says.

For medium/heavy trucks and buses, a different picture exists in terms of market growth, with Kenya joining the leadership ranks by volume of new vehicles expected to be sold.

“Kenya is expected to show the most pronounced growth among African countries, quadrupling in size between 2012 and 2027,” says Andrej Divis, global director, commercial vehicle forecasting at IHS Automotive. “With that, Kenya will round out the top three markets in terms of annual volume, joining Algeria and South Africa,” he says.

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