Local assembly plants
in Ethiopia’s fledgling auto industry plan to begin exporting
cars in a couple of years in a market dominated by Chinese
brands — part of an effort to industrialize the agrarian
economy, Reuters reports.
It’s
a grand ambition for the tiny auto industry, transforming a handful
of assemblers that bolt together imported kits into a network of factories that
can make the country Africa’s biggest car manufacturer over the next two
decades.
If
it succeeds, it won’t be the first time Ethiopia delivers on an ambitious
goal. With one of Africa’s fastest growing economies for more than a decade,
Ethiopia has pulled off the Grand Ethiopian dam and others that helped
make it an electricity exporter.
Ethiopia’s
expanding transport network includes the successful Ethiopian Airlines, the
largest and fastest growing African airline, according to GhanaWeb. Ethiopian
Airlines won the African Airline of the Year Award 2016 at the
25th Anniversary African Aviation Air Finance Africa Conference & Exhibit
in Johannesburg.
This
year, a railway will link the landlocked country, population 97 million,
to Djibouti port where the Red Sea meets the Indian Ocean, providing a cheap and
fast way to import raw materials and export finished goods.
“The
aim is to become a leading manufacturing hub in Africa,” said State Minister
for Industry Tadesse Haile in a Reuters interview. “We want to become the
top producer of cars on the continent in 15 or 20 years.”
In
industrial zones around Addis Ababa and the northern city of Mekelle, Ethiopian
firms and Chinese partners assemble vehicle kits. Theey imported 38,000
assembled cars in 2015, a 50 percent-plus increase over 2014.
Ethiopia
produces about 8,000 commercial and other vehicles a year for the
local market, including about 2,000 cars but they could make
more if they could get more foreign exchange to import more kits,
Reuters reported.
“There
is a lot of potential for growth,” said Ma Qun, deputy manager of China’s Lifan
auto group in Ethiopia, which has the capacity to assemble 5,000 cars a year
but whose output is less than 1000. “We want to start exporting from Ethiopia
by 2018, or a year later,” he said.
For
now, Ethiopia has to compete with South Africa, which
makes 600,000-plus fully manufactured vehicles, and Morocco, which makes
200,000. Egypt, Kenya and Sudan also assemble vehicles.
South
Africa has a large domestic market with annual per capita income of $6,800
compared to Ethiopia’s $550, according to World Bank 2014 data. Morocco —
annual per capita income, $3,070 — is geographically close to the
huge European market.
Assemblers
in Ethiopia put together Chinese brands Geely, FAW, BYD and Lifan.
With
Ethiopia’s scant currency reserves, assemblers face challenges getting
enough dollars to import kits. Another problem is consumers unsure
about quality.
Chinese
car firms are central to Ethiopia’s vehicle manufacturing
plans. Chinese car kits are cheaper than rivals such as Japan, said an
executive at an Ethiopian manufacturer.
South
Korea wants a piece of the action. South Korean automobile manufacturer
Kia Motors Corp. has broken ground on a community-run auto mechanic
training center in Ethiopia due to be completed in 2017, EconomicTimes
reported. The centers will enable trainee mechanics to work towards
national qualifications.
Ethiopia’s
car assemblers face another challenge. Their cars don’t hold their prices
as well as finished imports. “The big obstacle they face is resale value,” said
Araya Lakew, whose mekina.net website links buyers and sellers.
Some
used imports, such as Toyotas, even gain value with the weaker currency,
unlike locally assembled models.
Lifan’s
marketing director Tomi Su said his firm would keep making models that are more
attractive to consumers. “There will be new gadgets in every upgrade,” he said.
Ethiopia Wants To Be Africa’s No. 1 Auto Manufacturer
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