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AfCFTA key in driving auto sector investment momentum on the continent – Nissan boss  

By Xolisa Phillip, in Johannesburg
Posted on Thursday, 29 October 2020 14:14

South African President Cyril Ramaphosa gestures behind a driver's seat of a Nissan Navara, after an announcement at Nissan's plant in Rosslyn, near Pretoria, South Africa 10 April 2019. REUTERS/Siphiwe Sibeko

“We see Africa as a big opportunity,” says Guillaume Cartier, senior vice-president and chairman for Africa, the Middle East and India region at car maker Nissan.

“The market will grow,” Cartier says. He points to the continent’s sizeable population – “it’s big.” Auto ownership is not as high nor as saturated as other more mature markets. Most importantly, “there is potential.”

Nissan is looking at, among other opportunities on the continent, first-time buyers and government fleet solutions.

“Africa is fascinating. What we have to look at is how we can onboard the first-time buyer. This is a large part of the market – it’s nothing compared to Europe, the US, where you have to renew customers. That is one big category,” Cartier tells The Africa Report.

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The African Continental Free Trade Agreement is critical in this respect. The free trade agreement will help drive that potential and turn it into tangible outcomes.

In its absence, however, “like it or not, the market in Africa is extremely fragmented,” according to Cartier, who has a big-picture perspective on the car maker’s respective operations across the continent.

Common trade touch

Nissan has a commercial and industrial presence in South Africa, Nigeria, Egypt and Ghana. The company is still  evaluating the Kenyan market. The car manufacturer has production facilities and plants in South Africa, Egypt and Nigeria through a hybrid structure of either full ownership or partnerships. An assembly facility in Ghana is under development.

And so “we welcome the free trade agreement,” he says. “The issue is if each and every country has its own rules, it becomes mission impossible for someone who … [wants] to invest,” Cartier explains.

“If Africa is unable to have … one approach, the consideration for the investor will also be diminished. For me, … [it] is absolutely mandatory that we have … success in free trade,” explains Cartier.

“If we can go there, our opportunity can be realised even easier. I can consider using some of the industry positions we have to export within Africa,” he notes.

Sharing the market

Nissan’s market share in Africa is above 10%. In Egypt, it is nearly 14% and South Africa is below 10% “but with a good ranking”.

“We have a good presence, which reinforces my belief that if the opportunity is coming – I can catch it. The Nissan brand resonates with the customer,” enthuses Cartier.

But for that opportunity to happen, though, it is imperative the free trade agreement is realised.

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At present, Nissan is subject to externalities, such as an inability to export effectively to other markets within the region. This makes the car manufacturer vulnerable.

That is most pronounced in South Africa, where Nissan needs exports to offset volatility in the country’s exchange rate. Furthermore, South Africa is not the cheapest market in which to operate. As a result of this, Nissan relies on sufficient domestic output and strong exports to balance its equation in this key market.

Investment case for Africa

“Africa is important. […] We hope to be heard within free trade in Africa, to have something sustainable. That is where we need to be close. […] We need to speak freely,” he says.

Cartier is under no illusions about the fact that the automotive market worldwide is shrinking. Revenues are decreasing. This is the reality not only for Nissan, but for the sector in general.

“This means that we need to prioritise investment. Within that, there are choices to be made. The question is: where you do your investment. Where you do your investment is where you see the highest potential. But also where you have reassurance in sustainability,” he adds.

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“That is where the free trade is key,” he says. In simple terms, Africa’s potential is linked to its population size and the readiness of the market. Added to this, especially in terms of the latter, are simple but comprehensive regulations. At present, however, “sometimes we have things that are difficult to understand,” says Cartier. “If you are too complex and too demanding, simply, the [investment] equation is not working.”

Although Africa makes up 2% of Nissan’s overall portfolio, its potential is big. “That is why I look at it as a big opportunity and as a priority. We need to catch this priority. There is no question of there [being] … an opportunity. But there is a question of when the opportunity will come,” he says.

He argues that the free trade agreement is the best tool to answer this question.

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