Global premium vehicle manufacturer BMW, which has production plants in Africa in South Africa and Egypt, anticipates having another plant in sub-Saharan Africa within the next 10 years.
Tim Abbott, the chief executive of BMW Group South Africa, confirmed to Business Report last week that BMW would look at establishing an assembly plant in sub-Saharan Africa “when the time is right”.
Abbott said BMW would be part of the African Association of Automotive Manufacturers (AAAM) deputation going to Nigeria in July to look at what opportunities there were for manufacturers.
He said this was how the establishment of assembly plants started, but stressed new vehicle volumes in Africa were still very low, grey vehicle imports were still a problem and the trip to Nigeria was “like a toe in the water”.
But Abbott said the rationale for establishing an assembly plant in sub-Saharan Africa was that a vehicle manufacturer could be confronted by high import duties when it had a volume of cars it wanted to sell into a country.
However, Abbott said these import duties could be relaxed if that vehicle manufacturer had an assembly operation in that country.
Abbott said any assembly operation in a sub-Saharan African country would start as a simple semi knocked down (SKD) facility, leading to a completely knocked down (CKD)
“Today its not on the cards, but at some point it will happen. Within the next 10 years I’d be very surprised if we did not have some form of SKD operation in one part of sub- Saharan Africa.
“It will certainly be a knocked down plant to begin with. Look at Thailand and Malaysia and how fast they developed. If there is willingness in the government, it can happen and can happen within a 10-year time frame,” he said. The AAAM is committed to the development of business and trade relations in the automotive field, including vehicle and component manufacturing, between South Africa and African countries.
The association is also assisting a number of African countries with the formulation of automotive development policy options.
Several motor manufacturers, including Nissan and Ford, have in partnership with a local partner established SKD vehicle assembly operations in Nigeria in 2015, while Volkswagen established an SKD operation in Kenya in 2016 and launched a mobility strategy in Rwanda this year.
Nissan earlier this month announced that it planned to also start assembling vehicles in Kenya. BMW South Africa in 2016 took the first step in a long-term strategy to expand the footprint of both its car and motorcycle brands on the African continent by moving into sub-Saharan Africa and replicating its sales, after sales and financial services offering in seven countries from its base in South Africa.
Abbott confirmed at the time that BMW would initially be moving into Nigeria, Senegal, Ivory Coast, Togo, Ghana, Kenya and Angola and the working model would incorporate existing importers in the various countries. There are 25-million BMW cars on the road globally, of which about 300 000 were on South Africa’s roads.
- BUSINESS REPORT