Industry Trend Analysis - Autos Investment Round-Up: South Africa Remains Preferred Investment Destination - MAR 2018


BMI View : With two out of the four announced projects in our latest investment round-up taking place in South Africa, the country continues to retain its position as SSA ' s preferred autos manufacturing base for carmakers looking to tap both domestic and international markets.

In BMI's regular round-up of production investments, we track the latest projects from the production side of the industry and analyse regional trends that we see developing. In doing so, we hope to build a picture of any potential hubs that may be developing, as well as company strategy in terms of production bases and export programmes.

SUB-SAHARAN AFRICA AUTOS PRODUCTION INVESTMENT
Date Announced Country City/State/Region Company Value Brief Description Date Onstream
TBC = to be confirmed; na = not available. Source: BMI
Nov-17 South Africa Rosslyn Eicher Motors na Investment into domestic truck assembly 2018
Nov-17 Nigeria Lagos CFAO Group na Partnership with Mitsubishi Fuso Truck and Bus Corporation to assemble 500 units of the Fuso Canter truck annually 2017
Nov-17 Ethiopia TBC Energy Co-Invest Corp na Set up electric vehicle assembly and inductive charging stations TBC
Nov-17 South Africa Silverton Ford Motor Company USD220mn (ZAR3.0bn) Increase production capacity of the Ford Ranger pick-up truck 2018

In BMI's latest investment round-up of countries in the Sub-Saharan Africa (SSA) region, we have identified four new investment projects that were either announced or inaugurated in Q417, down from the six projects identified for the same period in 2016. While the majority of investments are lacking financial details, clear trends are evident in the nature of the projects, including the enduring appeal of South Africa as a production base.

South Africa Preferred Investment Destination

With two of the four projects in our latest investment round-up situated in South Africa, it is clear that the country is a preferred destination for automakers looking to tap both the local and export markets, which builds on the trend that we saw in last quarter's round-up ( see ' South Africa Still Relevant To Regional Expansion ' , October 16 2017). This trend is further bolstered by Ford's commitment to investing USD220mn (ZAR3bn) to expand its production capacity as it seeks to meet growing local and international demand for its Ranger pick-up truck. In addition, Indian automaker Eicher Motors' decision to assemble trucks in South Africa highlights the growing diversity of the local autos industry.

EV Investment Too Soon For Ethiopia

The trend for investment into relatively unusual production locations continues this quarter with Energy Co-Invest Corp's plan to assemble electric vehicles (EVs) in Ethiopia. While this investment adds to the potential for Ethiopia to become a regional EV manufacturing hub in the future, affordability issues as well as the country's erratic electricity supply will mean this project will face considerable challenges getting off the ground ( see ' Affordability And Infrastructure Threaten EV Plans ' , November 22 2017).