The African automotive industry is on the move. After cement, sugar, fertiliser, textiles and oil, Aliko Dangote is exploring other investment areas with the commissioning of a car assembly company in Nigeria. It is adding a new asset to its business base to reduce imports of used vehicles, a market once dominated by foreign multinationals.
With an initial capacity of about 44,000 vehicles per year, Dangote Peugeot Automobiles Nigeria’s (DPAN) newly built factory is making its mark in a domestic car assembly market that is relatively uncompetitive because it is heavily driven by international companies.
Africa’s richest man’s new car assembly factory in Kaduna, northwestern Nigeria, has opened its doors and begun assembling its first vehicles. In a joint venture with the French multinational PSA Peugeot-Citroën and the Kaduna State Government, an average of 120 vehicles will be assembled per day. The establishment of the factory comes four years after the Dangote Group received approval from the Nigerian regulator.
A factory with a distinguished brand
Vehicles to be built and shipped to the local market by 2023 will include the Landtrek, 3008, 5008 and the new 508. These models are expected to have outstanding aesthetics, technology and safety features to appeal to customers and the motoring public. These models will then be used to re-establish contact with Peugeot dealers to ensure a smooth entry into the market and to ensure that the company maintains its reputation for reliability. ”With the new assembly factory at Green Field Ultima, DPAN is doing a lot to ensure Peugeot brand visibility and spare parts availability to all Nigerians (…) We will do everything possible to ensure continued growth in a market with an automotive potential of over 100,000 vehicles per year“The company said, as reported by the website comprendre media.
An industry to limit import’s costs
The commissioning of a vehicle assembly factory in Nigeria is taking place in a context where several countries on the continent such as South Africa, Ghana, Egypt, Rwanda, Ivory Coast, Morocco, are working with the expertise of multinationals in the automotive industry and have welcomed significant investments in this direction to overhaul their own vehicle manufacturing units. This dynamic therefore makes it possible to limit imports of second-hand vehicles whose acquisition costs, for some, are in the same range as those of new vehicles because of shipping costs and customs duties.
“Africa is the leading destination for used vehicles in the world”
Another important factor is the condition of these vehicles, which are drained from the outside world for a second life in Africa. Indeed, the age of reconditioned vehicles is often very advanced, which means that their discharge into the environment is a real pollutant. Indeed, the age of reconditioned vehicles is often very advanced, which means that their discharge into the environment is a real pollutant. This is hardly surprising, since the same is true of second-hand stores. Africa is often the dumping ground for things that the West no longer needs.
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It accounts for 40% of imports out of a total of 14 million used light vehicles purchased worldwide over the period 2015 to 2018. In Nigeria, the Bureau of Statistics revealed in December 2021 that the country is the largest consumer of these types of vehicles on the continent. And that it had imported 531.7 billion naira, or about $1.3 billion, between January and September 2021.
The Dangote Group’s initiative therefore addresses a very crucial issue in keeping Africa’s resources within the continent.