According to Signe and Muniyati (2023), Africa’s automotive industry was valued at $30.44 billion in 2021 and is expected to reach $42.06 billion by 2027—representing a growth of nearly 40% over six years. The continent sees an average annual demand for 2.4 million passenger cars and 300,000 commercial vehicles. While this demand is currently met largely through imports of used vehicles, it is being driven upward by rising disposable incomes, a growing middle class, and rapid urbanization.
Domestic automotive production is gaining momentum, growing at an average annual rate of 7%. Currently, Algeria, Egypt, Morocco, and South Africa export around 56% of their vehicle output outside Africa. With production capacities already expanding, there is a strong opportunity to shift this focus toward meeting local demand.
Morocco and South Africa are leading Africa’s automotive exports, accounting for 80% of the total, with Algeria showing rapid growth. Volkswagen is a notable example of successful automotive investment in Africa, having established local assembly operations with the aim of driving industrialization through robust local value chains. The company credits its success to strong collaboration with African governments in shaping automotive policy and emphasizes the importance of consistent, enabling industrial frameworks for attracting investment.
Volkswagen identifies the AfCFTA as a critical enabler, enhancing market access and policy coordination. Countries such as South Africa, Morocco, Tunisia, Ghana, Kenya, and Egypt have made notable strides in creating investment-friendly environments, positioning themselves as key destinations for automotive manufacturing in Africa.
Newly inaugurated (2025) car assembly plant in Jigjiga, Ethiopia. The first electric vehicle assembled by Hyundai Motors was unveiled by renowned athlete and company representative Haile Gebrselassie (right), and driven by Prime Minister Abiy Ahmed during the launch ceremony.
The first Volkswagen vehicle assembled in Rwanda, inaugurated by President Paul Kagame (left), alongside a glimpse of Algeria’s advanced automotive industry (right), highlighting the growing footprint of automotive manufacturing across Africa.
The new Volkswagen Touareg assembled in Ghana (left), and the Sahel, the first electric car assembled in Burkina Faso in 2025 under the leadership of Captain Ibrahim Traoré (right)—a testament to West Africa’s growing role in the continent’s automotive and green energy transition.
The highly advanced Volkswagen automotive industry in South Africa (left), alongside the Peugeot automotive industry in Morocco (right), showcasing Africa’s leadership in automotive manufacturing and innovation in Southern and Northern Africa.
Key Opportunities for the automotive industry in Africa
Growing domestic demand
With Africa’s rapidly growing population, rising disposable incomes, and a burgeoning middle class, domestic demand for both passenger and commercial vehicles is expected to increase significantly. The demand for cars is projected to reach 2.4 million units annually, creating a substantial market for locally produced vehicles.
Increased local manufacturing
As domestic production grows, currently at a rate of 7% per year, there is a strong opportunity for automotive companies to shift focus from imports to local production, thus reducing reliance on foreign vehicles and boosting local economies.
Trade and market access via AfCFTA
The African Continental Free Trade Area (AfCFTA) provides a significant opportunity to expand intra-African trade. By eliminating tariffs and trade barriers, the AfCFTA makes it easier for manufacturers to access new markets across the continent and increase exports.
Government support and policy development
Many African governments are now creating favourable conditions for automotive investment, with supportive policies aimed at boosting local manufacturing. Countries like South Africa, Morocco, and Ghana have made significant strides in developing policies that attract foreign investment and support local production.
Electric Vehicle (EV) market potential
With the global shift toward green energy and sustainability, the African automotive industry is poised to tap into the Electric Vehicle (EV) market. Initiatives like the assembly of electric cars in countries like Burkina Faso and the growing interest in sustainable transportation provide new opportunities for innovation and industrial growth.
Foreign investment and partnership opportunities
Automotive giants like Volkswagen, Peugeot, and Hyundai are already establishing local operations across the continent. These companies, alongside new players, present opportunities for joint ventures, technology transfer, and the creation of robust local supply chains.
Infrastructure and logistics development
The expansion of roads, ports, and transport infrastructure across the continent is crucial for facilitating the growth of the automotive sector. Enhanced logistics capabilities will support both local production and trade, driving further opportunities for businesses involved in vehicle manufacturing and supply chains.
Job creation and skills development
The automotive industry is a key driver for job creation, especially in manufacturing, technical services, and supply chains. This growth will lead to an increase in local skills training and development, helping to boost the broader economy and improve livelihoods across the continent.
Africa’s abundant resources to support its growing automotive industry
Africa is a resource-rich continent, equipped with the essential materials to drive the growth of its automotive industry and attract global business. For instance, the Democratic Republic of Congo is a major source of cobalt, while Mozambique provides aluminum, and Côte d’Ivoire is a key supplier of rubber. Additionally, the Zambian Copperbelt offers copper, and various minerals including platinum, bauxite, and lithium can be sourced from Central and Western Africa, making the continent well-positioned to support automotive manufacturing with locally available raw materials.
Opportunities in new markets for electric and motor vehicles
With Volkswagen leading the charge in Africa, several countries including Ethiopia, Rwanda, Egypt, South Africa, Burkina Faso, and others are pioneering electric vehicle (EV) assembly operations. These initiatives, in collaboration with global automotive manufacturers, present significant opportunities to expand the electric vehicle market across the continent. As more African nations embrace EV production, the potential for new markets and innovation in the automotive sector continues to grow.
Editor’s Note: Kefena Effa (PhD)., Lead Scientist in Agriculture, Ethiopian Agricultural Transformation Institute (ATI)
Editor’s Note: The views entertained in this article do not necessarily reflect the stance of The Ethiopian Herald
KEFENA EFFA (PhD)
THE ETHIOPIAN HERALD WEDNESDAY 16 APRIL 2025
