1

Automechanika Dubai

19 – 21 October 2020 | DWTC

Automechanika Riyadh

2021

2

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3

Africa’s IAM Markets

Current Situation & Future Potential

4

Presentations by

Panel discussion and Q&A Session

Agenda

5

Automechanika Dubai

19 – 21 October 2020

6

Key Show Highlights:

Competencies:

Truck, motorcycle & agriculture

Academy:

Learning & development area of the show

Modern workshop:

Area for our garage/workshop audience – product demos & trainings

Product focus:

Body & paint

Oils & lubricants

Automechanika Dubai

7

Exhibitors• 87 exhibitors from 13 countries

• 52 exhibitors from 11 countries (Covid-19)

• Country Pavilions: Turkey, USA, South Korea, China, Hong

Kong, Taiwan

Visitors• 2,470 visitors

COVID-19 Effect• Lost 25 exhibitors due to travel restrictions

• Rolled over China, Hong Kong and Taiwan to 2021

New show dates in Q3 2021

Automechanika Riyadh 2020

01/07/2020 8© africon GmbH 2020

The IAM in Africa – Current situation and possible future scenarios

Automechanika Dubai - Webinar

Marc-Peter ZanderPartner & CEO africon GmbH

01/07/2020 9© africon GmbH 2020

Introduction africon

africon is a consulting company with sole focus on Africa. One key sector is automotive.

WHO ISafricon?

A hands on consulting team with extensive african experience

ESTABLISHED

2011

SOLE FOCUS AREA KEY BENEFITS

Reduction in costsReduction in timeReduction in risk

EXPERIENCE

More than

21 yearsof experience in business with Africa.

REPRESENTATION

NigeriaKenyaTanzaniaSouth Africa

AUTOMOTIVE HANDS ON

From day one africon works hands on.

More than

30 projects in

African countries.

OEM (on-highway)

OEM (off-highway)

IAM (on-highway)

IAM (off-highway)

01/07/2020 10© africon GmbH 2020

Poll question 1

Are you already active in Africa and to which extent?

01/07/2020 11© africon GmbH 2020

Population growth – Africa

By 2050 Africa will hold the most world wide population with over 2,4 billion inhabitants.

Sou

rce:

Un

ited

Nat

ion

s(2

01

4)

Development of world´s population(in billion)

0

1

2

3

4

5

6

7

8

9

10

1800 1850 1900 1950 2000 2050

Rest of the world2,9 billion

Developed countries 1 billion

China 1,4 billion

India1,8 billion

Africa 2,4 billion

World population 20106,8 billion

Developed

Developing

Pop

ula

tio

n in

bill

ion

s

World population 20509,5 billion

01/07/2020 12© africon GmbH 2020

Sou

rces

: W

HO

an

d J

HU

(2

02

0),

AH

K (

20

20

)

Current situation (as of June 24)

Corona cases in Africa are relatively low so far – but testing is as well.

Number of confirmed Corona virus cases(total number: 324,524, confirmed deaths: 8,621)

106,000

14.568

58.141

4.848

4.952

21,371

> 20,000

>10,000

>5,000

< 5,000

> 40,000

Corona testing(rate of testing per 1,000 inhabitants)

0

5

10

15

20

25

For comparison: Germany = 62.8India = 5.7

Status: June 2020

01/07/2020 13© africon GmbH 2020

Inte

rnat

ion

al M

on

etar

y Fu

nd

(2

02

0)

IMF: growth forecast 2020

Though lower than required, growth in Africa is still expected to remain in positive territory in 2020.

NG: -3.4%

GH: 1.5%

KE: 1%

ETH: 3.2%

CN: 1.2%

IN: 1.9%

01/07/2020 14© africon GmbH 2020

Opportunities from Corona

Current capacities of production in Kenya are declining.

Production capacities(in percent)

Logistics for spare parts in Kenya(% of respondents)

76% 77% 67%

Challenges in sourcing raw

materials

Outbound logistical

challenges

Increased cost of procuring spare

parts

0

5

10

15

20

25

30

% capacity before COVID-19

% capacity during COVID-19

Most of the companies have around 50% of their production capacity unused since the pandemic. The majority of participants see huge problems in sourcing, procuring and outbound logistics.

01/07/2020 15© africon GmbH 2020

01/07/2020 16© africon GmbH 2020

Luanda, AngolaNairobi, Kenya

This is Africa

The African continent is not only about impressive savannahs but it is also home to astonishing cities and industrialized urban areas.

Sou

rce:

CC

TV A

fric

a (2

01

9),

Go

ogl

e, W

ikip

edia

, G

oo

gle

Imag

es (

20

19

).

Dar es Salaam, Tanzania Lagos, Nigeria

01/07/2020 17© africon GmbH 2020

VIO in Africa

The total of Africa has approx. 52.5m VIO in 2018 which is slightly higher Brazil and Germany.

Sou

rce:

Wo

rld

Ban

k, A

fric

an D

evel

op

men

t B

ank,

CIA

Fac

tbo

ok,

Wo

rld

ban

k, I

HS

52.5mVIO

32.5mVIO

India 19.5mVIO

Indonesia

Germany

272mVIO

USA

43mVIO

47mVIO

Brazil

Total Africa

151mIO

China

225mVIO

VIO worldwide(2017, selected countries and regions)

Note: VIO = Passenger cars and commercial vehicles

01/07/2020 18© africon GmbH 2020

16

26

49

65

90

97

100

110

140

140

145

320

390

510

534

780

800

3,217

0 2000 4000

Rwanda

Gabon

Mauritius

Ethiopia

Uganda

Burkina Faso

Mozambique

Zimbabwe

Angola

Tanzania

Botswana

Senegal

Ghana

Cote d'Ivoire

Kenya

Nigeria

Congo (DRC)

South Africa

43

103

188

200

246

300

340

400

430

500

600

740

830

910

1,100

1,166

6,384

11,720

0 5000 10000 15000

Rwanda

Gabon

Mauritius

Burkina Faso

Botswana

Mozambique

Senegal

Uganda

Cote d'Ivoire

Tanzania

Ethiopia

Angola

Zimbabwe

Ghana

Congo (DRC)

Kenya

South Africa

Nigeria

Overview: Automotive data

Vehicle inflows into Sub Sahara Africa are increasing. Countries are increasingly having sizable fleets.

Sou

rce:

afr

ico

n r

esea

rch

in N

iger

ia, K

enya

an

d T

anza

nia

(2

01

6/1

7),

OIC

A (

20

18

), W

HO

(2

01

6),

afr

ico

n a

nal

ysis

(2

01

8)Vehicles in operation in Sub-Saharan Africa

(2016, in thousand units)

PC CV

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

Kenya Nigeria Ghana Ethiopia

2006 2010 2012 2016 2018 2019

Motor vehicle imports in Sub-Saharan Africa(2006 – 2019) in thousand units

01/07/2020 19© africon GmbH 2020

01/07/2020 20© africon GmbH 2020

News on Africa

01/07/2020 21© africon GmbH 2020

News on Africa

01/07/2020 22© africon GmbH 2020

News on Africa

01/07/2020 23© africon GmbH 2020

Sou

rces

: P

ress

& a

fric

on

res

earc

h (

20

19

)

OEM Focus: Volkswagen

VW positions itself in 7 African markets under its TRANSFORM 2025+ brand strategy.

Ethiopia

Kenya

Rwanda

• MoU signed to set up an assembly plant.• The delegation to Ethiopia was accompanied

by companies such as Bosch and Schaeffler, in an attempt to increase localization of components, introduction of mobility concepts the opening of a training center.

• Inaugurated an automotive production site in Kenya in 2018 but with limited capacity.

• Develops warranty plus a maintenance and service plan. In addition, financing options will be developed together with local banks to provide a needed boost to individual car ownership and Volkswagen’s return to the Kenyan market.

• The plant already rolled out the ever made vehicle.

• Plans to reach annual production of 5,000 cars in the first phase (SKD).

South Africa

• Maximum annual plant capacity is expected to be reached with a 3 shift operation of some 160 000 vehicles, in 2019; of which about 48% is exported to global markets.

Angola

• US $48m investment was announced in 2005 with American partner ANCAR.

• Construction was subject for delays till our day.

• Currently reviving talks with Angola government to set up the plant in the newly set up Luanda-Bengo SEZ.

Nigeria

Ghana

• MoU signed to construct an assembly plant in two phases: SKD (2019) then CKD (2022).

• Set up of a training center.

• MoU signed to expand assembly operations on a step-by-step basis and to turn Nigeria into an automotive hub on the western coast of Africa over the long term.

01/07/2020 24© africon GmbH 2020

Assembly activity - overview

While new vehicle sales declined, used vehicle sales surged in Nigeria.

Sou

rce:

Dra

ft A

uto

mo

tive

Po

licy,

Ken

yan

Go

vern

men

t (2

01

9),

Ken

ya R

even

ue

Au

tho

rity

(2

01

9),

af

rico

n r

esea

rch

(2

01

9)

20 20 2020

50

80100 100 100

2 58 10

1213

149

285 287

397

513

174

221

405

466

38 1237

50

5423 11 18

11

-80

20

120

220

320

420

520

2006 2008 2010 2012 2014 2016 2017 2018 2019

Capacity Actual assembly FBU imports New vehicle sales

Note: Total vehicle inflow based on trade statistics, in which numerous reporting errors were replaced by africon data modelling. 2019 data is an estimate based on Q3 data. No full year data available yet

Vehicle assembly and imports(estimates, in 000 units, PC & CV)

New carsales Q1

2020

- 55,7%

01/07/2020 25© africon GmbH 2020

The Nigerian automotive parts market

The aftermarket in Nigeria is already worth approx. $4.4bn.

Sou

rce:

afr

ico

n e

xper

t an

d d

istr

ibu

tor

inte

rvie

ws

(20

18

), a

fric

on

co

nsu

mer

su

rvey

(2

01

8),

afr

ico

n w

ork

sho

p s

urv

ey

(20

18

), a

fric

on

fle

et o

per

ato

r su

rvey

(2

01

8),

Nig

eria

n v

ehic

le r

egis

trat

ion

dat

abas

e (2

01

8),

afr

ico

n a

nal

ysis

(2

01

8)

Engine parts8% Fuel- and water

pumps2%Other repair parts

10%

Wear parts35%

Service parts45%

Engine parts Fuel- and water pumps Other repair parts Wear parts Service parts

Total:USD 4.4bn

The Nigerian automotive parts market by market segments(2018, in % of USD value)

01/07/2020 26© africon GmbH 2020

Spark plug imports across Africa

There are at least 7 countries in Africa importing more than 1.5m spark plugs per year.

01/07/2020

55

148

199

210

470

685

915

920

947

1,858

2,769

2,833

3,382

5,570

23,500

47,181

Rwanda

Zambia

Ethiopia

Gabon

Côte d'Ivoire

Congo (DRC)

Mozambique

Uganda

Cameroon

Tanzania

Senegal

Ghana

Angola

Kenya

Egypt**

Nigeria

Approx.* spark plug imports( 2016, in thousands of units)

*Note: based on UN Comtrade data, Excl UAE export data (reporting gap)**Egypt data based on research

Sou

rce:

UN

Co

mtr

ade

(20

18

)

NIGGHA

KEN

TZA

AGO

SEN

EGY

1

2

3

4

5

6

7

SA – excluded.

VIO in key countries:1. Nigeria – 12.7m2. Egypt – 6.5m3. Kenya – 1.7m

01/07/2020 27© africon GmbH 2020

Japan, 53%

EU, 9%

Rep. of Korea, 2%

India, 20%

Saudi Arabia, 5%

China, 2%

Others, 10%

EU, 36%

Japan, 25%

Rep. of Korea, 5%

India, 18%

South Africa, 4%

Others, 14%

EU, 73%

Japan, 7%

USA, 5%

UAE, 4%Canada, 4% Others, 8%

EU, 52%

Japan, 1%Rep. of Korea, 1%

USA, 19%

India, 13%

Canada, 7%

Others, 8%

Origin of PCs in operation

Though opportunities exist, markets are very heterogenous.

Sou

rce:

afr

ico

n r

esea

rch

(2

01

8),

UN

Co

mtr

ade

(20

18

)

PCs exported to SSA by origin of exports(2016)

01/07/2020 28© africon GmbH 2020

Company name

Vehicle focusEngine part, fuel- and water pump brands carried

Other IAM parts brands carried

Interest in new IAMPC CV

Ax

B

() …

C() None in automotive

D()

E ()

F

None

G

Sou

rce:

afr

ico

n d

istr

ibu

tor

inte

rvie

ws

(20

18

)

Distributors in Nigeria

Most brands are already represented in African markets. Recently various companies appointed new distributors in Nigeria.

1

2

3

4

5

6

7

Eurostar (CH)

01/07/2020 29© africon GmbH 2020

Sou

rce:

afr

ico

n in

terv

iew

wit

h R

ich

mo

ore

(2

01

8)

Local warehouses

A local warehouse with a distribution partner is key to success.

01/07/2020 30© africon GmbH 2020

Sou

rce:

Mck

inse

y &

co

mp

any’

s “

Afr

ica:

Big

ger

chal

len

ges,

big

ger

op

po

rtu

nit

ies

“ ar

ticl

e (2

01

9)

Disruption in the automotive markets

As the automotive markets disrupt, traditional business models will be declining with 38%.

5.4

3.4

0.1

2.1

+4.3

2015 2030 2030 Total

Disrupted (e.g, e-hailing, L3 - L4 vehicles, algorith-based insurance)

Traditional (e.g, taxis, non-autonomous vehicles, fuel sales)

-2.1

7.7

5.5

38% decline in traditional

revenues coming from disruption

56% of 2030 revenues coming from disrupted

opportunities

Global automotive ecosystem revenues(in $ trillion)

01/07/2020 31© africon GmbH 2020

Sou

rce:

Mck

inse

y &

co

mp

any’

s “

Afr

ica:

Big

ger

chal

len

ges,

big

ger

op

po

rtu

nit

ies

“ ar

ticl

e (2

01

9)

Potentials for the automotive market in Africa

Africa is one of the last markets still providing growth opportunities for more traditional aftermarket business models.

5.4

3.4

0.1

2.1

+4.3

2015 2030 2030 Total

Disrupted (e.g, e-hailing, L3 - L4 vehicles, algorith-based insurance)

Traditional (e,g Taxis, Non-autonomous Vehicles, Fuel sales)

-2.1

7.7

5.5

56% of 2030 revenues coming from disrupted

opportunities

Global automotive ecosystem revenues(in $ trillion)

• Africa will need time to develop a sufficient power network. Until then combustion engines cars will likely dominate in Africa.

• Last mile, broadband internet will take more than 10 years to be distributed within Africa. Traditional cars will still dominate the markets

• Affordability for new cars is still low. Therefore, the continent will still import 2nd hand cars

• New technologies in services concepts will be expensive and difficult to apply in Africa.

1

2

3

4

01/07/2020 32© africon GmbH 2020

Poll question 2

Will the African automotive aftermarkets play an

important role for your business in a post-covid

future?

01/07/2020 33© africon GmbH 2020

What will happen after Covid 19

Covid 19 can offer an opportunity to establish contacts with African companies.

1 LOCAL PRODUCTION WILL RISE IN FUTURE

2

3

4

African governments will further promote local production to reduce the dependency from the imports. This also applies for “easy to produce spare parts”.

AFRICAN COMPANIES WILL WANT MORE DIRECT CONTACTAfrican companies gain in international importance and will seek a direct contact to the OE suppliers instead of trading partners.

MORE TRADING WITHIN AFRICADistribution partners will increase their footprint within Africa to serve the markets locally. Larger orders will be placed to serve the surrounding markets with hubs e.g. Nigeria.

MIDDLE EAST WILL SERVES AS A HUB FOR AFRICATrading through Dubai etc. is very favourable especially with local warehouses. East Africa will continue to be served from ME. West Africa might turn to Europe directly.

5 AFRICA WILL PLAY A MORE VITAL ROLE FOR IAM COMPANIES As Africa's VIO is strongly growing and local laws will reduce the import of used cars there are more opportunities for international IAM companies.

01/07/2020 34© africon GmbH 2020

There are a lot ofchallanges in Africa andwe need to see on howwe can bring European

solutions to Africa.

We do not want Europeanstrying to bring European

solutions. We wantpeople wanting to know

how to do business in Africa!

3501/07/2020 © africon GmbH 2020© africon GmbH 2018

Questions?

Marc-Peter ZanderErik Deitersen

36

37

Thank you for joining us!

Replays will be available on

www.automechanikaDubai.com/Webinars

Follow us @automechanikaDu for all updates

Email us at automechanika@uae.messefrankfurt.com

38

Automechanika Dubai

19 – 21 October 2020 | DWTC

Automechanika Riyadh

2021