Technically, a vehicle is anything that can be used to transport people and goods on land. Africa‘s vehicle market is huge and growing bigger every year. Because road transport is dominant across Africa, the trade in cars (both new and used), motorcycles, buses and trucks is a multi-billion dollar market.
Nigeria alone spends up to $5 billion dollars every year importing vehicles (especially second-hand) from North America (both USA and Canada), Europe and Asia. The major buyers are individuals and businesses who want to own their private automobiles, and governments. Let‘s look at the core product categories:
Motorcycles – Every year, Africa imports over one million different brands of motorcycles, mainly from India and China. The huge demand for motorcycles in Africa is quite understandable. People on the move find them very affordable, flexible and fast. Motorcycles have also proved to be very good at navigating the continent‘s bad road networks and often help people in urban areas to beat the harsh traffic when it really matters! They are also able to enter remote areas where roads are either too bad or non-existent. Although motorcycles frequently feature in fatal accidents, their positive qualities have fed the huge demand.
Cars – Of all vehicle types, passenger cars are the most highly demanded across Africa. Although up to 70 percent of cars on African roads are used cars imported into the continent from the developed world, the number of new car sales is on the rise. With a sales growth rate (for new cars) of about 20 percent25 every year, Africa is one of the fastest growing car markets in the world.
Due to affordability reasons, second-hand or used cars currently dominate Africa‘s automobile market. However, as more Africans enter the middle class and income levels rise more people will be able to afford brand new cars. Most Africans are keen on fuel economy, low spare parts costs and inexpensive repair and maintenance for the cars they drive. Japanese, Korean, European and American car brands are the main preferences on the continent and this is likely to continue in the near future.
But be also aware that African car brands and other locally manufactured car models are now entering the market. Nigeria and Ghana are promoting them in particular. In June 2014, Nigeria announced the development of 30 car manufacturing plants across the country, offering payment schemes to make cars more affordable to the middle class.
Buses – Buses are the most common form of mass transportation across Africa, thanks to their affordability for both urban and rural transportation. Due to poorly developed rail transport systems, buses currently perform the roles that trains (e.g subway) do in developed countries. As a result, Africa has one of the world‘s largest concentrations of buses in the world!
Every year, due to increasing demand (especially from urban areas), governments and private businesses across the continent spend millions of dollars to acquire buses to shoulder the burden of urban transportation.
Trucks – The demand for these heavy duty diesel-powered beasts is growing across Africa. Heavy and bulky goods such as industrial raw materials, agricultural produce, construction materials, petroleum products, wholesale consumer goods, etc., all depend on trucks to be transported. As Africa‘s economy continues to grow and key activities like manufacturing, importation and agricultural production expand, the demand for trucks will increase in turn.
The vehicle trade business in Africa is largely decentralized (especially for the used vehicles market). New cars are typically sold through more organized dealerships. Used cars are largely imported by both big and small businesses and often individual (one-man) car salesmen, who order them through contacts based in North America and Europe.
Business Concept
You could either become a car trader yourself or facilitate the trade of cars. Here is what we mean: As a car trader you would possibly import cars or buy them locally to sell to your customers. You could also get in touch with some of the few local manufacturing companies – they do offer partnerships.
Alternatively you could facilitate care trade by running a car trade website where people can directly sell their cars to those who are looking to by one. Such sites have been very popular in Nigeria (carxus.com, nigeriacardealers.com, carmudi.com) and Kenya (cheki.co.uk), for example.
You could also run car trade shows in Africa, which are still very rare.
Niche Idea
Vehicle auction platforms are still a rarity in Africa. You could start one.
Top Countries & Policy Guidance
Any of the current growth countries in Africa where people have increasing spending power.
Action & Tips
Study popular African car trade websites to identify some customer preferences and local market gaps.
Success Story
Carey Eaton – Cheki (Kenya)
Carey Eaton returned to Kenya in 2011 and started Cheki from humble beginnings, growing it quickly into Kenya‟s number one car portal and later expanding into other countries such as Nigeria, Ghana, Tanzania, Malawi, Zambia, Zimbabwe and Uganda.
Mr. Eaton was the co-founder of the One Africa Media group of companies, which is the parent company of Cheki, BrighterMonday, BuyRentKenya and StayNow in Kenya, as well as similar internet businesses across Africa. Sadly, Carey Eaton was killed in January 2014 during an armed robbery at a friend‟s house in Nairobi.