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COVID-19 reduces new-vehicle sales in Africa, says auto manufacturers

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The COVID-19 pandemic has wreaked havoc on new-vehicle sales in Africa, which are expected to drop from 1.16-million units in 2019, to a current forecast of 830 000 units this year, the African Association of Automotive Manufacturers (AAAM) has said.

According to AAAM, this is a 28 per cent reduction, which is quite significant.

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However, it said the market will recover and believes that new-vehicle sales on the continent can increase to five million units per annum in the medium term.

Chief Executive Officer, AAAM, Dave Coffey, said the manufacturers are actively promoting the rollout of vehicle manufacturing value-chains in Africa, which requires intervention from governments to curb illegal, grey, and second-hand imports, as well as the drafting of policies to support local vehicle and parts assembly.

Coffey says second-hand and grey vehicle imports constitute more than 80 per cent of vehicle sales in Africa.

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“With an effective auto ecosystem, this can be reduced to an acceptable ratio that enables integrated auto manufacturing, whilst ensuring the safety of the consumer without major disruption to the existing used-car market.

“Ultimately, all second-hand vehicles should come from vehicles that were assembled on the continent, or that were imported as new vehicles, as part of an automotive programme.”

Coffey, who spoke at an AAAM and Deloitte Africa Automotive Forum, recently, said the automotive industry plays a “disproportionately small role” in manufacturing Africa.

“In 2019, new-vehicles sales in Africa represented 1.3 per cent of global demand, while Africa has 17.2 per cent of the world’s population.”

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The economic benefits of having a full-fledged integrated auto manufacturing sector are considerable adds Coffey.

“It requires advanced manufacturing technologies, while it also creates a deep value chain and skilled employment.

“The significant growth to five-million vehicles sold in Africa requires the implementation of effective automotive policy – the core focus of the AAAM.

“The opportunities for growth exist if one considers the young population, rapid urbanisation, and extremely low rate of motorisation in Africa; the potential is huge.”

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