The Egyptian government should end duty-free access for imported vehicles so as to stimulate domestic car assembly, Nissan’s most senior African-based executive Mike Whitfield said last week. It should also take positive measures to turn the country into a regional export hub. His remarks will have been met with approval in the regional headquarters of many multinational car makers in Africa as they look to the continent’s underdeveloped markets to help them compensate for deteriorating market conditions elsewhere.
Mindful that several organisations (including the Economist Intelligent Unit) do not expect the global automotive industry to regain 2019 employment levels until the second half of the 2020s at the earliest, carmakers including Nissan are now seeking cheaper labour and new markets in Africa to help them make up the shortfall.
An industry veteran who has previously headed up both Nissan’s South African and Egyptian operations, Whitfield assumed command of Nissan’s new pan-African business unit earlier this month. He will now spearhead the Japanese multinational’s drive into ‘the final frontier’ – the one-billion strong consumer market of sub-Saharan Africa which currently only accounts for 1% of global car sales and which is widely acknowledged to be the world’s biggest undeveloped new car market.
Although GDP per capita in sub-Sahara Africa dipped marginally last year, it has been rising steadily over the past 50 years, from $132 in 1960 to $1,585 in 2019. Nissan and many of the world’s other automotive majors are now simultaneously looking to capitalise from the African Continental Free Trade Area (ACfFTA). Due to have come into force last in July but delayed because of the COVID-19 pandemic, ACfFTA is currently scheduled to start reducing tariffs and easing the flow of goods between its 55 member states early next year.
Along with competitors Volkswagen, BMW, and Toyota, NIssan sees localized production as a key to the success of their African strategies and for some time have also been lobbying African governments to grant conditions that favour local assembly and manufacturing while curbing imports of cheap used cars.
Whitfield is the latest in a line of industry leaders to question Egypt’s decision last year to eliminate tariffs on cars imported from the European Union, even as it seeks to develop its own automotive industry. The Egyptian assembly sector “needed some protection”, he added.