India auto makers make inroads in Africa
Windhoek ‑ India’s nimble yet cost-effective auto manufacturers have made strides in gaining a foothold in the African market, though they are still a long way from muscling out the continent’s traditional suppliers of automotive products.
Japan’s Toyota accounts for a huge chunk of Africa’s growing automotive industry, followed by the US’s General Motors.
Research by Standard Bank group shows that 1.8 million units were sold in Africa in 2012 with Japan accounting for 237 000 units (13 percent) followed by General Motors with 180 000 units.
Analysts say that with the exception of China, most of the world’s largest vehicle exporting countries boosted their exports to Africa as compared to exports to the rest of their market.
France suffered a 22 percent contraction in global auto exports but still managed to lift its shipments to Africa by 11 percent.
The United Kingdom’s exports to the rest of its market grew by 8 percent since the 2008 financial crisis.
The UK’s exports to Africa, however, surged by 58 percent, Standard Bank analysts say.
Since 2008, India’s vehicle sales have expanded by an impressive 100 percent while exports to Africa swelled by 160 percent.
Since 2003, total Indian vehicle exports to Africa have surged by more than 1 000 percent, by far the fastest rate for this product group amongst Africa’s traditional and BRICS trading partners.
“Where in 2003 India was Africa’s 12th largest source of total vehicle imports, by 2012 it had shifted to 6th-ahead of both France (3rd in 2003) and the UK (6th in 2003,” Standard Bank analysts say.
Passenger vehicles and motorcycles have boosted India’s exports to Africa and last year the Asian economy exported $3 billion worth of vehicles, accounting for 11 percent of India’s total exports to Africa.
India’s car exports to Africa have grown by 2 400 percent to US$1.37 billion in 2012 since 2003 whilst motorcycle exports also swelled by 3 200 percent to US$430 million during the same period.
India’s vehicle exports to Africa surpass those of China (US$590 million) and Korea (US$2.8 billion), the analysts say.
The bulk of India’s exports to Africa in 2012 were absorbed by South Africa, which accounted for 41 percent (US$564 million) followed by Algeria (US$410 million) and Egypt (US$132 million) whilst Nigeria, Angola and Uganda are Africa’s leading importers of motorcycles from India.
India’s charge onto the African market is led by Tata Motors and Mahindra Mahindra, which have established bases in South Africa.
Tata has invested US$700 million in South Africa and exports a range of passenger vehicles in the entire Southern African market. Mahindra has established 56 dealerships in South Africa and its products are becoming popular in Botswana, Namibia, Swaziland, Zambia and Zimbabwe.
Mahindra will open a vehicle assembly plant in East London, in South Africa in 2017 and its growth has been driven by its increasingly popular pick-up-truck (bakkie). Other automotive suppliers include Bajaj Auto, the world’s fourth largest two-and-three-wheeler, Maruti Suzuki, Hero MotoCorp and TVS Motors.
Multinationals with manufacturing plants in India such as Hyundai Motors India, Toyota Kirloskar Motors, which manufactured the Etios model, Ford India and Nissan India also boost the country’s exports to Africa.
“African markets demand durable, cost effective transport solutions, and here new manufacturers groomed in similarly trying emerging economy environments are likely to excel,” the analyst say.
“While China has swiftly embraced the growing market for vehicles used for bulk transport and extractive industries, India’s gains in the passenger vehicle segment have been meaningful.
“No country, either advanced or emerging, has grown its vehicle exports to Africa as swiftly since 2008 as India has managed to do.”