Automotive Africa – Mega Trends An Industry Paper highlighting the key trends impacting the future growth of African continent and its Automotive Industry Authored for Automechanika Dubai 2014 "50 Years of Growth, Innovation and Leadership". June, 2014 www.frost.com INTRODUCTION – AFRICAN CONTINENT OVERVIEW 2 Top 10 Fast Forward Facts for Africa: Did You Know That.... 1. By 2020, about 43% of the people living on the African continent will live in urban areas. 2. Africa as a region will account for 15% of the world’s urban population by 2020. 3. The African middle class population will be approximately 360.0 million by 2020. 4. 220 million Africans are only able to meet basic needs now, but will become consumers by 2017. 5. The combined spending power from the continent’s top 18 cities by 2020 will be $1.3 trillion 6. Regional Trade Integration in Africa will bring about $216.00 billion in trade value from Intra- Trade. 7. Mobile penetration in Africa will reach 90% by 2020 with internet penetration also exceeding 60% rate by 2020. 8. Mobile Transactions to account for 75% of all banking transactions by 2020. 9. e-Government Initiatives will receive $9.60 billion in investments from the African Governments over the next decade. 10.Renewable energy capacity of Africa will reach 12,000 MW by 2017. Source: Frost & Sullivan analysis. 3 Top Mega Trends in Africa Regional Renewable Energy Integration Urbanisation Innovating to Zero Responsible Revolution Connecting the Unconnected New Business Models Future Infrastructure Photo Credits: Dreamstime. Source: Frost & Sullivan analysis. M818-39 4 Three Main Trends in Urbanisation: Development of Mega Cities, Mega Regions, Mega Corridors Mega Cities, Regions, Corridors - Global MEGA CITY MEGA REGIONS MEGA CORRIDORS City with a minimum Cities combining with population of 8.0 million suburbs to form regions The corridors connecting and a GDP of $250.00 (Population over 15.0 two major cities or Mega billion in 2025 (14 Mega million) Regions (60 km or more Cities in 2013 and 25 Mega apart, and with a Cities in 2025) combined population of 25.0 million or more) EXAMPLE: Lagos and EXAMPLE: North-South EXAMPLE: Cairo Kinshasa Corridor Photo Credits: Dreamstime. Source: Frost & Sullivan analysis. M818-39 5 By 2020 Africa Will Account for 15% of the World’s Urban Occupants; Africa’s Resources Will Remain the Primary Driver of Urbanisation Global Urban Population by Region, 2010-2050 7,000,000 By 2020 Africa will possess the second largest number of 38,404 6,000,000 404,248 urbanised individuals 35,140 381,940 647,683 31,815 5,000,000 624,263 582,264 30,106 355,498 28,405 340,490 585,489 577,552 4,000,000 26,764 324,279 560,910 25,167 306,918 533,147 567,403 288,802 502,342 560,560 3,000,000 468,756 552,486 3,382,364 543,276 Population (‘000)Population 533,295 3,014,491 2,598,357 2,000,000 2,168,798 2,383,268 1,958,245 1,757,314 1,000,000 1,230,914 660,589 761,292 986,239 412,989 486,525 569,116 0 2010 2015 2020 2025 2030 2040 2050 Oceania Northern America Latin America and the Caribbean Europe Asia Africa Source: UN Department of Economic & Social Affairs, Frost & Sullivan analysis. M818-39 6 Corridors will Unlock Economic Potential of Landlocked Countries Leading to Better Inter-Dependence Among Cities and Regional Growth Mega Corridors, Africa, 2050 The North Delta Region • Combined population of 77.0 1,000 km Abidjan-Ouagadougou Alexandria Cairo Corridor million • Three emerging corridors: Cairo-Suez Cairo-Alexandria Cairo-Ismailia. Ouagadougou Addis Ababa 900 km Kampala-Nairobi- Abidjan Ibadan Mombasa urban corridor The Greater Ibadan Lagos Accra Accra (GILA) Corridor Lagos Nairobi • Combined population >18.0 million Kinshasa • Contributes combined GDP of Dar es Salaam $127,592,000. Luanda North-South Corridor • Facilitate inter-regional trade Trans-Cunene Corridor from Cape to Cairo. • Will link the Democratic Republic of • Free trade area comprising Congo (DRC) with South Africa 533.0 million people. through Angola and Namibia. • Combined GDP of $833.00 billion or 58% of Africa’s GDP. Main Developed Corridors Cape Town Johannesburg/ Future Corridor Development Durban Pretoria Source: UN-Habitat, 2010; Frost & Sullivan analysis. M818-39 7 Markets with 80% Broadband Penetration are More Than Twice as Innovative as Countries with 40% Penetration Mobile, Broadband, and Internet Penetration per Region, Global, 2010 and 2020 Currently, 77% of the World’s Population Holds a Mobile Subscription 140% Europe North America 123% 110% 90% 100% 100% 100% 90% 82% 70% 68% 56% 110% Asia 65% 75% 56% 21% Africa 11% Latin America 90% 60% Oceania 120% 112% 95% Mobile Penetration 2009 91% 50% 41% 85% 82% 83% 70% Mobile Penetration 2020 27% 8% 57% Broadband Penetration 2009 4% Broadband Penetration 2020 9% Internet Penetration 2009 7% Internet Penetration 2020 Source: 2010 telecommunications statistics from ITU, 2020 projections from Frost & Sullivan analysis. M818-39 8 Annual Growth Rate of 9% till 2020 will allow Africa to reach Mobile Penetration Rate Close to Market Saturation Mobile Telephone Penetration Rates: 2011 Mobile Telephone Penetration Rates: 2020 Mobile Phone Subscriptions • In 2010, African mobile penetration is just less than 50% • That said, several countries have reached saturation • By 2020 we expect 90% mobile penetration rate 80 - 100% $80.00 billion 60 - 80% investment in networks 40 - 60% 20 - 40% Low cost mobile phones <20% Value-added Services Mobile subscribers 2011 Mobile subscribers 2020 550.0 million Growth Opportunities 1,170.0 million Source: Frost & Sullivan analysis. M818-39 9 Transport Route Integration Across the African Continent will increase Inter-Continental Trade and Drive Economic Growth Numerous projects are Transport projects Southern Sudan Value aimed at improving Africa’s Roads ($ Million) in Africa will drive transport infrastructure Current rail projects 225.0 down the current African Transport Infrastructure high cost of Development Solid red line - existing transport, which is transport routes, dotted lines - planned Value hindering growth transport routes Uganda Roads ($ Million) and is among the Current road projects 548.8 highest globally… Future road projects 2, 952.0 Transport Costs (US cents per km) West Africa 11c China 5c Value Kenya Roads ($ Million) Current road projects 807.0 East Africa 8c France 5c Future road projects 313.0 Value Kenya Ports ($ Million) Southern Africa 6c USA 4c Current rail projects 332.0 Source: World Bank; Frost & Sullivan analysis. M818-39 10 Africa’s Largest Economies and Engines of Growth to 2020 Morocco GDP $175 billion ($91.7 billion in Algeria Egypt 2010) GDP: $310 billion GDP: $448.9 ($158.9 billion in billion 2010) ($218.84billion in 2010) Sudan Nigeria GDP: $162.3 in GDP: $510.5 billion ($65.9 billion ($206.6 billion in 2010) billion in 2010) Ghana GDP: $47.5 Kenya billion ($18.0 GDP: $81.0 billion billion in 2010) (32.4 billion in 2010) Angola GDP: $201 billion (86 billion in 2010) Note: The figure denotes GDP at market prices in 2020 The figure in brackets denotes GDP at market prices in 2010 Source: Frost & Sullivan and International South Africa Monetary Fund Database, 2010 GDP: $620 billion ($357.2 billion in 2010) 11 Foreign Investment Increasing Foreign Investment Especially from China to Influence the Economical and Political Environment in African Nations; Global CV Vision 2020: Chinese Investments—Africa: 2012–2013 • 1 out of 5 buses sold in Sub-Saharan region is from China China-Africa Bilateral Trade,2002-2022 ~420 500 400 300 ~200 200 Billion ($) 100 12 0 2002 2012 2022e • Bilateral trade involves export of minerals, oil and gas and other related materials which are critical for Chinese growth. 12 Dedicated Vehicles Being Developed for African Terrain Mobius Motors - Expected launch price 10k Flat-pack OX truck http://www.independent.co.uk/life-style/motoring/features/sir-torquil-norman- http://www.mobiusmotors.com/vehicles has-designed-a-flatpack-ox-truck-for-the-developing-world-8617814.html / 13 13 Same vehicle, multiple functions $ 14 www.frost.com AFRICAN AUTOMOTIVE MARKET OVERVIEW 15 African Automotive Market Characteristics A Battleground for Market Share and Customers in a low Volumes Market 4x4’s, SUV’s Government European & Japanese & Competition and Pickups & corporate US brands Korean is intense continue to sales for are leading brands across the dominate major in North occupy top continent across industries Africa but spots with new Africa remain now across West entrants dominant Chinese and and Sub- from channels Korean are Saharan emerging increasing Africa brands from their China and dominance India 16 More than 21.6 million vehicles operational in Africa The Top 4 account for more than 65% of all vehicles in Africa . North Africa = nearly 11.0 Million . In Sub-Saharan countries more than 30 . Sub-Saharan Africa (excluding South Africa) year old vehicle are still = 10.6 million available in UIO Others 1.63 Ghana 0.57 Nigeria 5.39 <5 Yrs 15% Uganda 0.22 >20 yrs. 30% Tanzania 0.36 6-10 Yrs Kenya 0.99 17% Mozambique 0.23 Angola 0.68 Key 4 markets 11-15 Namibia 0.18 contributes 16-20 Yrs Botswana 0.20 Yrs nearly 65.5% 14% Zimbabwe 1.17 24% Zambia 0.24 Tunisia 0.97 >16 years Morroco 2.29 vehicle = 54% Algeria 3.47 Egypt 3.06 Base Year 2013; Source: Frost & Sullivan Analysis 17 These vehicles generate demand for nearly $7.68 billion* Average cost of repair in North Africa = $423 per vehicle/year Average cost of repair in Sub Saharan Africa = $285 per vehicle/year . North Africa = nearly $4.65 billion (60.6%) Overall per vehicle repair .