ILMA Compoundings September 2017 - 12
INDUSTRY RUNDOWN International Insight Africa's Automotive Lubricant Market Grows By Lam Lye Ching Demand for automotive lubricants in Africa is expected to grow thanks to increasing motor vehicle sales and the growth of foreign automotive manufacturing facilities on the continent. With a compound annual growth rate of 3.5 percent, Africa's automotive lubricant consumption is expected to reach 763,782 kiloliters by 2020. Mineral oil lubricants will continue to dominate the market, according to Automotive Lubricants for Africa, a report by Markets and Markets, a U.S.-based industry consultancy firm. "The increased purchasing power, large number of fleet vehicles and high-end cars are generating demand of lubricants for passenger cars," said the report. Egypt is the largest market for automotive lubricants in Africa, with a compound annual growth rate of 3.6 percent from 2015 to 2020. This is in part the result of a growing tourism industry spurring an increase in private transport fleets, which boosts demand for automotive lubricants. Egypt, together with South Africa and Nigeria, is also a major automotive hub for Africa. In 2014, the number of registered passenger vehicles in Africa was only 42 million, according to Africa Automotive Insights by Deloitte, a global consultancy firm. With the continent's motorization rate at about 44 vehicles per 1,000 inhabitants, or less than one-third of the global average of 180 vehicles, the growth potential is substantial. The company forecasted Africa's passenger vehicle sales to reach up to 10 million per year within the next 15 years and "foresees room for growth across the automotive value chain including sales, after-sales." In 2015, the number of new vehicles was about 1.55 million, with South Africa, Egypt, Algeria and Morocco accounting for more than 80 percent. In Africa, the majority of passenger vehicles are imported. Used cars account for more than 80 percent of vehicle 12 SEPTEMBER 2017 | COMPOUNDINGS | ILMA.ORG imports from the U.S., Europe and Japan, and they differ in types and age for each country. In Nigeria, "a large share of secondhand vehicles are imported from the U.S., given that vehicle specifications in this market are more in line with the demand and taste of Nigerian consumers," said the report. The average age of Ethiopia's fleet is 15 to 20 years, and Japanese brand Toyota has 90 percent share. In Kenya, some used cars can be 20 years old as there are no regulations to limit the age of these vehicles. Following the footsteps of Nigeria, South Africa and Egypt, East African countries are now looking into the implementation of new rules to limit the age of imported used cars in order to develop the local automotive industry.
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