There are more and more people and few new cars. German automakers expect to sell a large number of cars in Africa eventually. Until then, they still have many obstacles to overcome. Africa is only a very small and insignificant market when it comes to cars compared to China. However, that is no good reason to ignore the region, according to the German Association of the Automotive Industry (VDA). China, as well, was once too insignificant for automakers. Today, in contrast, if you want to be successful, you need to sell primarily in China.
German automakers are looking to start investing in Africa
"Every big market always has a small beginning," says Kurt-Christian Scheel of the German Association of the Automotive Industry (VDA). After all, Africa continues to experience high growth rates and car markets are not saturated as in industrialized countries. Furthermore, increasingly more people are living in cities, and this is also increasing the demand for transportation, says Kappel. " You can assume that demand would increase significantly."
Photo Courtesy dw.com
At first glance, for automakers, it seems like a huge potential. Currently, only 44 out of every 1,000 Africans have a car. As 17 percent of the world's population, or more than 1.3 billion people, live in Africa, which means that even in absolute figures very few of them own their own car. Seen in this light, Africa has immense potential for car sales.
Otherwise it would be a question of purchasing power. According to economist Robert Kappel from the University of Leipzig, there is already a middle class. It comprises around 300 million people, based on data from the African Development Bank. "But most of them are lower middle class. So they can't really afford new cars," Kappel objects.
This also explains why about 80 percent of the cars on the road in Africa are old used cars from industrialized countries. Meanwhile, while over 1.3 billion Chinese bought about 21 million new cars in 2020, just under one million new cars were sold in Africa. Their scenario is not very good either.