Johannesburg - BMW South Africa has taken 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.
It will replicate its sales, after sales and financial services offering in seven countries from its base in South Africa and has urged the continent to develop free trade zones.
Tim Abbott, the chief executive of BMW Group South Africa and sub-Sahara, confirmed that the group 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.
“In our increasingly globalised world we are left with mostly mature economies. Africa is seen by many as the last frontier, where conditions for a future economic boom are favourable,” he said.
“Unlocking the potential of sub-Saharan Africa will need to be a collaborative effort due to the existing challenges in the region,” he said.
Abbott also stressed the importance of South Africa developing stable bilateral and multilateral treaties that made it possible to export products into the continent.
BMW Group South Africa last year announced a R6 billion investment at its vehicle manufacturing plant in Rosslyn in Pretoria for the future local production of the BMW X3 sports utility vehicle range, a model it believes is particularly well suited to Africa.
Opening trade
Abbott said the vision for the future should be free trade zones and working towards creating a sophisticated trade bloc to compete globally, adding that incentivised and reciprocal trade agreements would stimulate mutual market access and the sharing of expertise in manufacturing and service industries.
Local vehicle manufacturers have had to rethink strategies in recent years to penetrate Africa’s market after several countries, including Nigeria, introduced trade barriers such as duties and levies on imported new vehicles.
Trade and Industry Minister Rob Davies confirmed last year that South Africa continued to make progress in the development integration programmes that sought to broaden the market in Africa to support manufacturing operations that would target not just single countries or even individual regions, but large regions of the continent.
Davies said the tripartite free trade area legal text was opened for signature at a summit held in Egypt in May last year and a target date was set to conclude the negotiations on tariff schedules within a year.
He added that South Africa, as part of the Southern Africa Customs Union (Sacu), had exchanged tariff offers with the East African Community and was engaged in negotiations with them and was close to exchanging offers with Egypt.
The Continental Free Trade Area negotiations were launched at the AU summit in South Africa in June last year, with an ambitious target to conclude them by next year.
Dumisani Radebe, the BMW Group South Africa director for the sub-Saharan region, said it made sense for BMW as one of the world’s leading luxury car and motor bike makers to position itself strategically in Africa and contribute to the long-term development of transport infrastructure.
Long term
“We understand that the pace of change is going to be slow in the beginning, but our feeling is that 10 years from now that pace is going to start accelerating. Therefore, the key is to invest now for the long term,” he said.
Radebe said asset financing was not a developed model in the sub-Saharan region and the BMW group wanted to offer vehicle financing through strategic partnerships with banks and financial institutions that had a strong presence in Africa.
“I believe more people will buy cars if they have access to vehicle finance. Our financial services division will be playing a key role to ensure we tap into the market gaps that currently exist in the region,” he said.
Radebe said the group would leverage the region’s established digital and mobile space as a sales channel and was also looking to partner with multinational companies on the continent, while looking to also participate in the used car market sector.
BUSINESS REPORT