The One Belt and One Road Policy leads a better economic situation to countries, such as South Africa. Today let’s take a look at the “stories” of automobiles in Africa and China. And we analyze
1. South African Automobile (Including bus, passenger cars, SUV, MPV and minibus for sale South Africa and etc) Market Data Profile
News from China-Africa Trade Research Center shows that the automobile (Including bus, passenger cars, SUV, MPV and minibus for sale South Africa and etc) industry is the backbone of South Africa’s national industrial base, accounting for 6.8& of GDP (4.3% for manufacturing and 2.5% for retail). South Africa’s automobile (Including bus, passenger cars, SUV, MPV, and minibus for sale South Africa and etc) market is ranking 22nd in the world (up from 24th in 2014) with a volume market share of 0.68%.
The South African National Automobile Manufacturers Association recently released data showing that, in December 2018, the export of new automobile (Including buses, passenger cars, SUV, MPV, and minibus for sale in South Africa and etc) increased by 56%. Moreover, the export of new automobiles for the whole year reached a record of 351,154 units.
The reason of the change of statistics:
The analyst believes that the 56% increase in data was related to the downturn in the previous year. In December 2017, Volkswagen South Africa suspended its automobile production in preparation for the launch of new products. And other famous brands also implemented production cuts for similar reasons. By December 2018, all South African automobile (Including buses, passenger cars, SUVs, MPV, and
News from the Economic and Commercial Office of the Embassy of the Republic of South Africa that the automobile export in 2020 is going to hit a record high. According to a report on the South African independent media website on 11th March 2020, the South African National Automobile Manufacturers Association stated that new car sales in a few places may decline. But South African automobile exports in 2020 may reach a new record high for the third consecutive year. The association predicts that South Africa’s exports this year will reach 391,900 vehicles, surpassing 387,100 vehicles in 2019. In 2019, South Africa’s share of global new production increased from 0.64% by 0.69%, ranking 22nd in the world.
South Africa ranks 14th of light commercial vehicles in the world, with a market share of 1.26%. It is Europe accounts for 73.8% of total automobile exports. NAC said, Africa remains the focus of the domestic auto industry, with the low car penetration in the continent of Africa, growing middle class and the continent’s free trade zone stimulating future demand, even from a low starting point.
2. South Africa – Next Nugget Marketing
“Step out” certainly will be a question but an opportunity for some automobile enterprises.
The Beijing Summit of the Forum on China-Africa Cooperation (FOCAC) was held on 3rd September 2018. According to the meeting content, the automobile (Including bus, passenger cars, SUV, MPV, and minibus for sale in South Africa and etc) industry has a huge boost to the development of China and Africa.
Chinese Enterprise may have a new marketing increase in Africa. Related data shows that the export of vehicles in China is 1,060,000 units, increased 31% year on year. And among them, 641,000 unit cars were exported to “B&R” countries. Up to 23.8% year on year. Overall, auto export is still dominated by the Asian market. But the increase is mainly from South and North American markets.
Compared with those well-known brands, the volume of Chinese car companies in Africa is still relatively small. According to the data provided by the China Association of Automobile Manufacturers, in the South African market. Chinese auto companies only sold 2,337 units in August.
As the domestic auto market slows down, “Step out” is bound to become a problem for some automobile companies. Central South America and Africa are expected to become the most potential auto markets for Chinese auto companies. According to the Nielsen Global Automobile Consumer Brand Research, Mexico and Chile in the Americas and Egypt in Africa have a high degree of intention to buy Chinese automobile brands. And more than 40% of local consumers would consider buying Chinese automobile brands.
3. Potential of Africa Market
Africa has great potential in the automobile market. The data shows, Africa accounts for 15% of the world’s population. While only 1.196 million vehicles were sold in the region last year, down 9.08% year on year and accounting for less than 1.5% of global car production.
As known, South Africa, Egypt, and other countries are the mainstream automobile consumer markets in Africa. The annual sales of automobiles are more than 200,000, and they are in a period of steady growth. Meanwhile, they also have supporting supplies and assembly factories of several brands local. Algeria, Morocco, Ethiopia, and other countries are potential automobile consumption markets. At present, the entry barriers of such markets are easy and the sales models are usually mainly middle and low models.
“Detroit of Africa”.
In effect, as one of the regions with the most developed automobile industry in Africa, South Africa is known as the “Detroit of Africa”. For Africa, South Africa is the “fulcrum” that levers the entire African auto spare parts market.
Actually, in early 2013, The South African government has launched a plan to develop a new car industry with a goal of producing 1.2million units of vehicles by 2020. At present, the automobile industry is the second largest industry in South Africa, accounting for about 7.5% of the GDP in the country. With more than 8 million cars on the market and more than 600,000 unit new cars sold annually. It is the largest automobile market on the African continent. And its automobile production accounts for more than 80% of the total production in Africa.
But the marketing is quite difficult in Africa as so many famous brands are there.
And have their own assembly factory and local agent, China automobile is in a less competitive position under the comparison.
Industry insiders analyzed that due to the relatively backward economy in Africa, consumers do not have high requirements for technology. Once the new entrants can meet the demand at price, they can obtain a considerable amount of release. Therefore forming a huge impact on the existing pattern. Moreover, the economical and practical characteristics of Chinese brand’s cars are more consistent with the demands of the African market. And they also with the advantages of cost control and better performance. However, South Africa currently has higher requirements on vehicle emissions, safety, and higher requirements on product quality and after-sales service.
Therefore, an industry insider said that facing the new opportunities in the global market, Chinese auto brands (Including bus, passenger cars, SUV, MPV and minibus for sale South Africa and etc) need to strengthen the brand building and publicity to well know that requirements of the local market and local users. Meanwhile, auto companies need to accelerate their own transformation upgrading and overseas marketing layout. Moreover, to improve the competitiveness of their products and the after-sale experience. And also take great advantage of new energy vehicles to gain the first-mover advantage.