Executive Summary of 2017 African Commercial Vehicle Industry

2025 Outlook of African Commercial Vehicle Market Despite the current slowdown, the African commercial vehicle market is expected to grow at a

robust CAGR of 6.1% until 2025 driven by increasing infrastructure development

MCDA-18

March 2017

2 MCDA-18

Contents

Section Slide Number

Executive Summary 3

Research Scope, Aim, Objectives and Methodology 13

African CV Market – Outlook 18

North African CV Market – Outlook 37

Algeria CV Market – Outlook 43

Egypt CV Market – Outlook 48

Morocco CV Market – Outlook 53

Sub-Saharan Africa CV Market - Outlook 58

Ghana CV Market – Outlook 64

Kenya CV Market – Outlook 69

Nigeria CV Market – Outlook 74

South Africa CV Market – Outlook 79

Tanzania CV Market – Outlook 84

Growth Opportunities and Companies to Action 89

Key Conclusions and Future Outlook 92

Appendix 96

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3 MCDA-18

Executive Summary

4 MCDA-18

African Commercial Vehicle Market: Key Findings, Africa, 2016

Source: Frost & Sullivan

2 South Africa is the largest contributor to the commercial vehicle market in Africa with 53% share. Until 2025,

Nigeria, Kenya and Morocco, are expected to be the fastest growing markets in Africa and also the only markets

to increase their share in the entire African commercial vehicle market.

3 The LD truck segment is dominated by Japanese OEMs such as Isuzu, Toyota and Mitsubishi making up 67.8% of

the market. The M&HD truck segment on the other hand is fragmented with a more balanced split among key

OEMs. In the Bus segment however the European players are more prominent with nearly 50% market share.

5 Latest technologies such as alternate powertrain and truck telematics penetration is currently negligible. Apart

from a few CNG buses in certain North African markets and adoption of some basic telematics services in South

Africa there is no presence of these technologies anywhere else in the region.

1 The African commercial vehicle market, despite the current slowdown due to low oil and commodity prices, is

expected to grow from 317,533 units in 2016 to 538,774 units in 2025 growing a CAGR of 6.1% largely driven by

increasing infrastructural development and rising urbanization.

4 Asian OEMs, especially from China and India, are expected to further proliferate the market at a rapid pace.

These OEMs will spearhead the supply of value trucks in the region whose share is expected to rise from 43% in

2016 to 55% in 2025.

Key Findings

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Top Trends These 8 trends are expected to have a transformative affect on the African commercial vehicle industry

impacting economies, businesses, societies and personal lives

African Commercial Vehicle Market: Top Trends, Africa, 2016

Growing Urban

Centers

Regional

Integration

Future

Infrastructure

New Business

Models


Improving

Connectivity

Rise of Asian

OEMs

Rise of Value

Trucks Platformization

Africa will experience

rapid urban expansion

owing to fast paced

development across the

continent

Rapidly increasing

proliferation of mobile

phones and broadband

connection in the region

to be a continuing trend

Platforms seen as a tool

to drive down costs, de-

congest supply chain and

harmonize selections

globally

Several trade corridors

across the region will

bring nations closer and

amalgamate diverse

practices

Key infrastructure

developments in health,

transport, power and

connectivity to play an

important role

Development of newer

business models focused

on affordable products

and services to the

customer

Commercial Vehicle

manufacturers from Asia

to gain prominence by

offering affordable

alternatives

Rapid proliferation of

trucks built to existing

customer demands and

regional conditions at

reasonable prices

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New Vehicle Dealerships: • Predominantly privately owned

in partnership with the

concerned OEM(s).

• Also offer spare parts,

accessories and after sales

services

Truck and Bus Business Model/Outlook New vehicles in Africa are predominantly imported as knocked down kits and assembled in local facilities,

whereas used vehicles are imported as fully built units


African Commercial Vehicle Market: Business Model, Africa, 2016

New Vehicles: Vehicles imported

primarily from Europe

and Asia as CKD, SKD

kits or FBUs

Imported Used

Vehicles: Mainly European,

American and

Japanese brands

Shipped in primarily

from the Middle-East

and Europe

Assembly Plants: Locally owned units which

partner with OEMs to

assemble vehicles received

as CKD and SKD kits.

Imported as FBUs by

OEMs and sent to

dealerships

Importers/Middlemen: Help bring in used trucks

from abroad while charging

a commission fee

Used Vehicle

Dealerships: Independent dealers with

own infrastructure and

individual service/repair

shops

Customers:

Private Fleets,

For-Hire

Fleets, Single

Truck Owner,

Government

and Municipal

Agencies

Selling through local

motor dealers

The entities involved in the sales of vehicles generate continuous revenues through service and sales of spare parts

7 MCDA-18

Market Opportunity Despite the great market potential current industry sentiment in Africa is subdued, due to declining trade as

a result of falling oil and commodity prices, which is expected to recover gradually by 2025


Countries Short Term

(2017-2019)

Medium Term

(2020-2022)

Long Term

(2023-2025)

Algeria

Egypt

Ghana

Kenya

Morocco

Nigeria

South Africa

Tanzania

African Commercial Vehicle Market: Market Opportunity, Africa, 2017-2025

High Low Moderate

8 MCDA-18

Unit Sales and Market Share Forecast Apart from Nigeria, where currently the CV industry is in turmoil, Kenya, Morocco and Tanzania are

expected to be the fastest growing commercial vehicle markets in Africa until 2025


The African Commercial Vehicle Market: Unit Sales and Market Share Forecast, Africa, 2016-2025

Algeria 60,258

Units (2016)

88,810

Units (2025) CAGR

4.4%

Egypt 40,725

Units (2016)

63,268

Units (2025) CAGR

5.0%

Ghana 4,460

Units (2016)

6,159

Units (2025) CAGR

3.7%

Kenya 15,389

Units (2016)

28,636

Units (2025) CAGR

7.1%

Morocco 23,775

Units (2016)

42,661

Units (2025) CAGR

6.7%

Nigeria 2,248

Units (2016)

22,50

Units (2025) CAGR

29.2%

South Africa 168,403

Units (2016)

282,845

Units (2025) CAGR

5.9%

Tanzania 2,275

Units (2016)

3,895

Units (2025) CAGR

6.2%

19.0%

% Share (2016)

16.5%

% Share (2025)

12.8%

% Share (2016)

11.7%

% Share (2025)

1.4%

% Share (2016)

1.1%

% Share (2025)

4.8%

% Share (2016)

5.3%

% Share (2025)

7.5%

% Share (2016)

7.9%

% Share (2025)

0.7%

% Share (2016)

4.2%

% Share (2025)

53.0%

% Share (2016)

52.5%

% Share (2025)

0.7%

% Share (2016)

0.7%

% Share (2025)

9 MCDA-18

Rise of Asian OEMs Asian OEMs in the recent past have made swift in-roads into the African market and currently contribute

73.1% of the total CV market share in Africa.


African Commercial Vehicle Market: Rise of Asian OEMs, Africa, 2016

Japanese OEMs: 64.4%

market share

Isuzu, Mitsubishi Fuso,

Hino, Toyota, Nissan and

Mazda

Chinese OEMs: 6.1%

market share

Dongfeng, Shaanxi,

Sinotruck, JAC, Foton,

FAW, King long and JMC Indian OEMs: 2.4% market

share

Tata, Ashok Leyland and Eicher

• The African new truck market was predominantly

dominated by premium brands from North

America and Europe.

• White spaces in the lower price range and

market potential enticed Asian manufacturers in

setting up shop in the region.

• Asian manufacturers have gained traction in recent years due

to optimum truck specs which comply with regional demands.

• These brands are positioned as affordable and value for money

alternatives to their premium counterparts.

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Key Regional Trends I Growing emphasis on urban transport along with government incentives to produce vehicles locally is

expected to have the most impact on the commercial vehicle industry in the region


Alternate Fuel Urban Transport

Tourism

Localization Logistical Hub

Alternate fuel vehicles such as

CNG light commercial vehicles and

buses and electric buses, which

are currently at a nascent stage of

development, are expected to gain

traction in future

Growing emphasis by local

governments in the region on

development of public transport

infrastructure including

implementation of BRT systems in

major cities

Increasing incentives to OEMs to

assemble and procure locally,

backed by tightening restrictions on

new and used vehicle imports

A key region that links Europe and the

Middle-East featuring critical

intersecting points and transportation

streams across the region

Tourism is one of the key revenue generators in the region

especially in Egypt and Morocco. Is seen as a sector giving

added impetus to transportation and urban development

African Commercial Vehicle Market: Key Regional Trends, North Africa, 2016

Key

Trends

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Key Regional Trends II Top most trends in the Sub-Saharan region: accelerated infrastructural development along with rapid

urbanization and increasing proliferation of Asian OEMs


Key

Trends

Infrastructure Development Asian OEMs

Connectivity

Fuel Standards Urbanization

Growth in the region to be

propelled by developments in

road network, trade corridors

and various construction and

energy projects

In addition to strong presence of

Japanese OEMs, there is an

increasing proliferation of Chinese

and Indian OEMs backed by

growing engagement of respective

governments in the region

Countries such as Nigeria and

Ghana have been promoting low

sulphur diesel and implementing

those standards from 2017 impacting

sale of used trucks in the region

The Sub-Saharan region is

experiencing urban migration at a fast

pace with formation of multiple mega-

cities in the continent

Commercial vehicle connectivity in the region will be

pioneered by South Africa through truck telematics

solutions. This is expected to later proliferate to other Sub-

Saharan countries such as Nigeria, Ghana and Kenya

African Commercial Vehicle Market: Key Regional Trends, Sub-Saharan Africa, 2016

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Current and Future Outlook

Current (2016) Future (2025)

Market • Overall market: 317,533 units; LD trucks: 243,142

units; M&HD: 65,695; Bus: 8,697.

• Currently the market is in a trough due to fall in oil

and commodity prices.

• Overall market: 538,774 units; LD trucks:

392,233 units; M&HD: 129,706; Bus: 16,835.

• Expected to be back to normal on the path of

high growth and increasing opportunities.

Competition • Japanese and Chinese OEMs are more dominant

in the light and medium duty segment.

• European OEMs have more prominence in the

heavy duty segment especially tractor-trailers.

• Asian OEMs, especially Chinese and Indian

OEMs, in a more dominant position across all

segments.

• Europeans OEMs to bring in more value segment

brands into the market.

Product • The region has a sizeable imported used truck

market presence, imported predominantly from

Europe.

• Value truck segment currently at 43%.

• The share of imported used truck market to come

down considerably owing to tighter import

regulations and increasing local assembling.

• Value truck segment expected to grow to 55%..

Technology • Almost negligible penetration of alternate fuel

technologies such as CNG and electricity.

• Only South Africa has any decent adoption of truck

telematics solutions in Africa.

• A sizeable penetration of CNG vehicles expected

in North Africa in the bus and light truck segment.

• South Africa followed by Rest of Africa, especially

Nigeria, Ghana and Kenya, to begin adopting

advanced telematics services.

Challenges • Major macroeconomic hurdles due to slowdown in

the economy.

• Currently infrastructural, financing and labor

challenges plaguing the market.

• Importing fully-built vehicles to face more

stringent regulations.

• Political instability along with weak economic

foundation pose a risk.

Major economies of Africa are expected to recover from the current slump once oil and commodity prices

start climbing up after which it is expected to be back on the path of accelerated growth

African Commercial Vehicle Market: Current and Future Outlook, Africa, 2016 and 2025


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13 MCDA-18

Research Scope, Aim, Objectives and Methodology

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Light Duty Trucks (<6T), Medium and Heavy Duty Trucks (>6T), Buses Vehicle Type

2017 to 2025 Forecast Period

2016 to 2025 Study Period

2016 Base Year

Africa:

North Africa (Algeria, Egypt and Morocco)

Sub-Saharan Africa (Ghana, Kenya, Nigeria, South Africa and Tanzania)

Geographical Scope

Short Term Medium Term Long Term

2016 2017 2018 2019 2020 2022

Forecast Period

Base

Year

2021 2023 2024 2025

Timeline


Research Scope

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Aim:

The aim of the study is to offer a strategic outlook of the African commercial vehicle market for 2016–2025

focusing on light duty trucks, medium and heavy duty trucks and buses.

Objectives:

• To Understand top trends and its influence in the African commercial vehicle market.

• To provide a strategic overview of the African commercial vehicle market, including key participants and

opportunities.

• To highlight business opportunities and challenges for Western and Asian OEMs and suppliers.

• To provide market size and forecasts for truck and bus market by OEMs and segments.

• To compare and provide strategic analysis for each of the countries part of the study.

• Evaluate the attractiveness of the African commercial vehicle market in the short to medium term and its

impact by 2025.


Research Aims and Objectives

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What are the current and future trends affecting the market?

How is the future growth potential and market opportunities in the market?

Who are the key participants, the market leaders and their market share?

How is the market structured and its business model?

How is the economics environment impacting the sales and production of commercial vehicles?


Key Questions this Study will Answer

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African Commercial Vehicle Market: Key Industry Participants, Africa, 2016

Research Methodology: Frost & Sullivan’s research services are based on secondary and primary

research data.

Secondary Research: Extraction of information from existing reports and project material within the

Frost & Sullivan database to include data and information gathered form technical papers, specialized

magazines, seminars, and internet research.

Primary Research: More than 10 interviews have been conducted over the phone by senior

consultants/industry analysts with original equipment suppliers, regulation authorities, and distributors.

Primary research has accounted for 80% of the total research.


Research Methodology

Company

UD

Volvo

Company

Renault

Scania

Shaanxi

Sinotruk

Tata

Toyota

Company

JMC

King Long

MAN

Mercedes-Benz

Mitsubishi

Nissan

Company

Ford

Foton

Hyundai

Isuzu

Iveco

JAC

Company

Ashok Leyland

Chevrolet

Daewoo

DAF

Dongfeng

FAW

18 MCDA-18

The value truck segment share in Africa is expected to rise from 43% in 2016 to 55%

in 2025 2

Truck telematics services in Africa is expected to go beyond just South Africa to other

African regions such as Nigeria, Ghana and Kenya by 2025 . 3

The African commercial vehicle market is expected to grow from 317,533 units in

2016 to 538,774 units in 2025 at a CAGR of 6.1% 1


The Last Word—3 Big Predictions

19 MCDA-18

One of Frost & Sullivan’s core deliverables

is its Market Engineering studies. They

are based on our proprietary Market

Engineering Methodology. This approach,

developed across the 50 years of

experience assessing global markets,

applies engineering rigor to the often

nebulous art of market forecasting and

interpretation.

A detailed description of the methodology

can be found here.


Market Engineering Methodology

http://www.frost.com/prod/servlet/me-research.pag

Automotive

Executive Summary of 2017 African Commercial Vehicle Industry