In order for the auto market on the African continent to gain momentum, they must first create better conditions in every way. Morocco has started to regulate the importation of used cars in such a way that this does not create unfair competition and encourage infrastructure investment. Other countries like Ghana are already allowing any type of used cars that are obsolete and do not enter the country. They have heavily restricted the importation of used cars. This creates a better environment in Ghana for automakers who also offer up to ten years of tax exemption.
For German manufacturers, the size of the market is also an important factor because they need to manufacture large quantities for production to be worthwhile. Africa has 54, but they are all small countries. Demands within the African continent must be grouped into industrial production, said Christoph Kannengießer of the African Association. An automobile plant does not make much sense for all the demand in a country.
According to Kurt-Christian Scheel, Managing Director of the VDA, markets in Africa are still underdeveloped. The infrastructure and trade between African states are still very underdeveloped, so it is difficult to identify the individual markets that African states should pay more attention to.
The free trade zone would be a leap forward for the auto industry
Photo Courtesy dw.com
It would be very important to form treaties between countries and remove obstacles to trade. The African Continental Free Trade Association (AfCFTA), which started the New Year 2021, could be the first step. The plan would be for around 90% of the rates to be reduced in the next few years. From eight to ten years we could see different conditions on the African continent so that all its states are integrated into this automobile development plan.
African Car makers Are Little known in Europe
Investors and local authorities may wonder if it is better to encourage domestic production of African brands than to prioritize foreign brands, as India or China have done, which have not allowed foreign corporations to strip them of profit margins. However, all of these issues are already being addressed. In Kenya, Mobius Motors produces robust SUVs for local needs.
