SSA auto industry holds long-term growth potential – VWGA MD

By Ernest Bako WUBONTO

With a population exceeding one billion and a gross domestic product (GDP) of more than US$1.5trillion, automotive giant Volkswagen Group Africa (VWGA) sees long-term growth potential in Sub-Saharan Africa (SSA), excluding South Africa.

However, the company has highlighted that persistent structural bottlenecks must be urgently addressed through decisive policy actions and collaborative partnerships to unlock this potential.

In 2024, approximately 1.2 million new vehicles were sold across the African continent. Of this figure, SSA—excluding South Africa, the continent’s most developed automotive market—accounted for only 175,915 new vehicle sales. In contrast, over one million used vehicles were imported into the region during the same period.

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.

North Africa’s car market outlook, however, was forecasted to be the fastest-growing in the world. With a population size of about 260 million people and a GDP of US$886billion, the block sold 502,369 new vehicles in 2024. Morocco and Egypt are the second & third biggest markets for new vehicle sales in 2024.

Meanwhile South Africa, with a population of 61 million people and a GDP of US$377billion, sold 545,000 new vehicles in the previous year.

Chairperson and Managing Director – VWGA, Martina Biene, indicated that by the end of this century, 13 of the world’s 20 biggest mega cities will be in Africa — up from just two currently — as well as more than a third of the world’s population will be in Africa.

Referencing these statistics, she indicated that the Volkswagen Group sees great potential for the auto industry’s growth in the region; hence, the need for policy-makers to collaborate with manufacturers for an efficient new vehicle value chain that will address the current trend of being a dumping ground for salvaged vehicles from around the globe.

Additionally, she stressed that the establishment of a single market under the African Continental Free Trade Area (AfCFTA) will attract increased foreign investment in Africa’s automotive industry.

“By 2035, total exports will increase by 29 percent. Intra-continental exports are expected to increase by over 81 percent, while exports to non-African countries would rise by 19 percent,” she said.

Martina Biene added that the AfCFTA could spur infrastructure development across Africa, including improvements to transportation networks and logistics infrastructure.

“With reduced trade barriers, manufacturers can more easily source components and parts from different African countries,” she iterated.

The Volkswagen Group is optimistic that new vehicle demand in SSA will increase exponentially with the right vehicle asset financing to address affordability, harmonisation of vehicle standards, including homologation and improved fuel quality, a used car import ban policy and bilateral trade agreements.

 

Challenges to new automobiles in SSA

Poor fuel quality has a significant negative effect on new automobiles, impacting both performance and longevity.

Iron and sulfate contaminants block catalytic converters and spark plugs, reducing efficiency and increasing emissions.

High-quality fuel ensures optimal combustion, reducing engine stress and preventing premature wear, leading to engine efficiency and longevity.

Martina Biene elaborated that even though cleaner fuel is more expensive than the poor-quality options, it keeps the engine efficient and the car lasts longer.

“While cleaner fuel is more expensive, it helps maintain engine efficiency, reducing maintenance costs and ensuring the car lasts longer,” she stressed.

Absence of standardised automobile policy in most countries within the sub-region also remains a challenge that independent states must take action to address.

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