Industry Trend Analysis - Local Production Will Support Vehicle Sales As Protectionism Policies Take Hold - AUG 2017

BMI View: Ethiopia ' s growing consumer base and protectionis t policies will attract more automakers to set up local production in the country and this will supplement the vehicle supply as vehicle imports slow . Locally produced vehicles will have lower cost s and will driv e low base growth over our 2017-2021 forecast period.

We believe the high taxes levied on imported vehicles in Ethiopia will have its desired effect, which is to attract a greater number of automakers to produce vehicles locally. Furthermore, the growing consumer base will make the local market more appealing to automakers and support vehicle sales over our forecast period. We forecast vehicle sales to experience strong growth (but from a low base) of 12.0% in 2017 and average 12.6% as local production activity ramps up over our 2017-2021 forecast period.

Vehicles imported into Ethiopia for personal use are subject to five different cumulative types of taxes according to the Ethiopian Revenues and Customs Authority as they are classified as luxury goods ( see table below).

Local Production Will Drive Low Base Growth
Ethiopia - Vehicle Sales Growth
f = BMI forecast. Source: Renault, BMI

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