Vehicle sales in West Africa is expected to average 5.7 per cent in the coming year, declining by 3.2 percentage points from 9.4 per cent in 2021, said Fitch Solutions.
This phenomenon of a challenging 2022, appears to spread throughout the sub-Saharan Africa region, and Fitch describes this as a ‘bumpy road’ ahead, owing to the region’s prolonged lag when it comes to COVID-19 vaccine levels.
Given this outlook, country performance in the West Africa region indicate that Nigeria, for instance, is expected to experience the strongest vehicle sales growth levels in the region over 2021 with a forecasted growth rate of 15.0 per cent followed by a 8.3 per cent expansion in 2022.
“This is because we believe that rising oil prices and stronger economic output will result in consumer and business sentiment improving and thus igniting vehicle purchases.”
Fitch Solutions
This notwithstanding, a depreciating local currency will weigh on overall purchasing power over 2021, Fitch said. This will likely see consumers and businesses continue to look for vehicles in the used market over the new autos market.
For Ghana, Fitch holds a positive outlook for vehicles sales over 2021 as sales in 2020 suffered following the COVID-19 outbreak, which severely impacted the ability of individuals, businesses and governments to carry out vehicle purchases.
Accordingly, this will lead to favourable low base effects over the same period as consumers and businesses regain confidence as economic activity picks up, leading to higher demand for new and used vehicles. As a result, total vehicle sales is expected to expand by 8.3 per cent in 2021 to reach 45,440 units following an expected 17.3 per cent contraction in 2020.
SSA’s Vehicle Sales to Slow Down
According to Fitch Solutions, the SSA region’s vehicle sales is expected to increase by 15.8 per cent in 2021, following an estimated contraction of 23.5 per cent in 2020, to reach an annual sales volume of just under 930,000 units.
In adducing what could account for this forecast, Fitch said: “We expect passenger vehicle sales to increase by 16.4 per cent and for commercial vehicle sales to expand by 16.0 per cent.
“Looking to 2022, we forecast that the SSA regions vehicle sales growth to slow to 5.6 per cent year-on-year with strong upside risk if currencies strengthen and if the supply and the price of used vehicles normalise we could see a strong uptick in sales towards the end of 2022.”
Fitch Solutions
Despite an underdeveloped vehicles market, the region will continue to benefit from the greater uptake of ride-hailing services, Fitch said. The growth of the ride-hailing industry in SSA offers automakers and car dealers an opportunity to develop a new vehicle sales market in the continent.
This is owing to the fact that, the majority of markets in SSA are characterised by low incomes and high borrowing costs which impede the development of a new vehicle sales market. Additionally, liberal regulations with regards to the importation of used vehicles adds more pressure to the development of a new vehicle sales market, Fitch said.
“Under the ‘vehicle ownership per 1,000 people’ indicator in our Autos Sales Risk/Reward Index (RRI)… the SSA region achieved a score of 18.0 out of a possible 100, compared to the global average of 50.0.”
Fitch Solutions
With this index measuring vehicle penetration rates per 1,000 inhabitants to gauge the level of vehicle ownership, such a low score indicates lower vehicle ownership. In the SSA region, the top three countries with a vehicle ownership score above 50.0 include Mauritius, Botswana and Gabon.
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