BMW, which has production plants in Africa in South Africa and Egypt, anticipates having another plant in sub-Saharan Africa within the next 10 years. Photo: Bloomberg
JOHANNESBURG - Global premium vehicle  manufacturer BMW, which has  production plants in Africa in  South Africa and Egypt, anticipates  having another plant in  sub-Saharan Africa within the  next 10 years. 

Tim Abbott, the chief executive  of BMW Group South  Africa, confirmed to Business  Report last week that BMW  would look at establishing an  assembly plant in sub-Saharan  Africa “when the time is right”. 

Abbott said BMW would be  part of the African Association  of Automotive Manufacturers  (AAAM) deputation going to  Nigeria in July to look at what  opportunities there were for  manufacturers. 

He said this was how the  establishment of assembly  plants started, but stressed  new vehicle volumes in Africa  were still very low, grey vehicle  imports were still a problem  and the trip to Nigeria was “like  a toe in the water”. 

But Abbott said the rationale  for establishing an assembly  plant in sub-Saharan Africa  was that a vehicle manufacturer  could be confronted by  high import duties when it had  a volume of cars it wanted to  sell into a country. 

However, Abbott said these  import duties could be relaxed  if that vehicle manufacturer  had an assembly operation in  that country. 

Abbott said any assembly  operation in a sub-Saharan  African country would start as  a simple semi knocked down  (SKD) facility, leading to a completely  knocked down (CKD)
assembly. 

“Today its not on the cards,  but at some point it will happen.  Within the next 10 years  I’d be very surprised if we did  not have some form of SKD  operation in one part of sub- Saharan  Africa.

“It will certainly be a  knocked down plant to begin  with. Look at Thailand and  Malaysia and how fast they  developed. If there is willingness  in the government, it can  happen and can happen within  a 10-year time frame,” he said.  The AAAM is committed to  the development of business  and trade relations in the automotive  field, including vehicle  and component manufacturing,  between South Africa and African  countries. 

Assisting

The association is also assisting  a number of African  countries with the formulation  of automotive development  policy options. 

Several motor manufacturers,  including Nissan and  Ford, have in partnership with  a local partner established SKD  vehicle assembly operations in  Nigeria in 2015, while Volkswagen  established an SKD  operation in Kenya in 2016 and  launched a mobility strategy  in Rwanda this year. 

Nissan  earlier this month announced  that it planned to also start  assembling vehicles in Kenya.  BMW South Africa in 2016  took 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 and replicating its sales,  after sales and financial services  offering in seven countries  from its base in South Africa. 

Abbott confirmed at the time  that BMW 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.  There are 25-million BMW  cars on the road globally, of  which about 300 000 were on  South Africa’s roads.

- BUSINESS REPORT