Africa
region experiences an upsurge in vehicle
ownership despite the second hand imports taking the lion’s share in almost all
countries in the region.
“Local vehicle assembly reduces foreign exchange drain and supports government policy goals on import substitution,
increase of exports, creation of employment and boosting industrialization,”
said Weissenberg.
Regional paints and coatings companies such as Basco Paints, Crown Paints,
Sadolin Uganda, Insignia and Goldstar
dominate the region’s automotive market
with various products such as thinners,
primers and fast-dry sythentics.
In Kenya for example, there are several domestic assembly plants, mostly the
completely-knocked-down (CKD) such as
General Motors East Africa, Associated
Vehicle Assemblers, Hero Motocorp,
Foton, Hino and Toyota.
In early February 2017, France’s
Peugeot announced plans to restart its
stalled production in Kenya of its ‘508’
and ‘3008’ models with a target of at least
1,000 units within the first year.
In late 2016 Germany’s Volkswagen
inaugurated its new production facility in
Thika town, 45 km northwest of the capital Nairobi. The company hopes to make
1000 units annually during its first phase
of its production expansion plan.
The OEMs are being attracted to
Kenya, East Africa’s biggest manufacturer of paints and coatings, by government
incentives including the waiver of the 25
percent import duty previously levied on
CKD kits and removal of the 20 percent
excise duty on locally assembled vehicles.
An earlier analysis of Kenya’s au-
tomotive industry by Oxford Business
Group supports Weissenberg’s view. It
said: “A number of companies with as-
sembly operations in Kenya such as
Japan’s Toyota and U.S.’ General Motors
are looking into applying for the incen-
tives, which has so far only been ap-
proved for Volkswagen.”
It estimated between 70 percent and
90 percent of Kenya’s current motor vehi-
cle population is made up of second hand
imports, which has a positive influence on
the growth of the country’s automotive
refinish market due to demand for vehicle
maintenance and repair services.
“Passenger vehicles are Kenya’s fourth
largest imports at $429 million in 2014
while commercial vehicles were ranked
seventh with a value of $370 million,”
said Weissenberg.
For the manufacturers and suppliers of automotive paints and coatings,
Weissenberg predicted increase in demand fueled by the anticipated surge
in vehicle numbers on Kenya roads to
5 million by 2030. Vehicle population
in Kenya grew at 7. 6 percent between
2005 and 2014.
In neighboring Ethiopia, although the
automotive market is dominated by second hand vehicle imports, demand for
vehicles is rising sharply according to
Weissenberg. An estimated 8,000 vehicles
were assembled in Ethiopia in 2015 while
another 38,000 were imported, which
was 50 percent higher than in 2014.
Currently, commercial vehicles form
the biggest import item in Ethiopia with a
value of $859 million in 2014.
However, Weissenberg said
Ethiopia’s persistent foreign exchange
problem is the main constraint in growing Semi-Knocked Down (SKD) and
CKD assembly.
OEMs active in Ethiopia’s automotive sector are Geely, FAW, BYD, Lifan
and Bishoftu Automotive Industry that
is run by the Ethiopian military with capacity to assemble, upgrade and localize
buses, pick-ups, Suvs, trucks and military vehicles. Germany’s Peugot is constructing a vehicle assembly plant in the
landlocked country.
A recent analysis of the Africa auto-
motive industry by consultancy Deloitte
said the rise in income levels in many
African countries and the emergence of
a growing middle class will destin the
continent to be “the final frontier for the
global automotive industry.”
“Given Africa’s population size and its
positive economic outlook, automotive
companies will be able to gain a competi-
tive advantage by adopting a medium to
long term view towards the continent,”
said Deloitte.
Although no exact figures are readily
available to show the share of each coat-
ing solution in the African market, the
ongoing global campaigns for reduced
emissions and efficient fuel consumption
is likely to push OEMs in the region to
embrace powder coatings and shift from
solvent borne products that are com-
monly used in the automotive industry.
Experts and coatings industry analysts
say powder coatings are considered environ-
ment-friendly and offer high quality finishes
compared to the solvent borne products that
continue to raise concerns about their high
flammability and toxicity levels.
Meanwhile, Weissenberg said decora-
tive paints and coatings currently con-
stitute more than 80 percent of the total
market in Kenya and Tanzania. Kenya is
experiencing a 7 percent growth in the
decorative paints and coatings segment
compared to Tanzania’s 6.2 percent.
Nairobi-based Crown Paints continues to dominate the East Africa decorative
paints and coatings market with a $38.9
million share according to Weissenberg.
Crown Paints, which has depots across
East Africa and recently opened a factory
in Uganda, supplies East Africa’s automotive industry with metallic paint systems
of 2K acrylic systems and fast dry nitro
cellulose systems.
Basco Paints and Insignia Ltd with
a 19. 8 percent and 15. 4 percent market share respectively are the other top
market players while Sadolin Paints and
Goldstar with 12. 5 percent and 7. 9 percent are next in East Africa market ranking according to Frost & Sullivan. Smaller
suppliers in the region have a combined
share of 5. 4 percent.
“The decorative paints and coatings
market in Kenya and Tanzania is set to
grow at a CAGR of 6. 7 percent by 2020
due to factors such as urbanization,” said
Weissenberg.
He said production volumes of the
decorative paints and coatings in the two
countries is estimated at nearly 60 million
litres in 2017 and could reach 91.5 million liters in 2020.
In 2015, Kenya had the highest share
of the water-based paints at 69.1 percent
compared to 51. 3 percent for Tanzania.
However, Tanzania had 48. 7 percent
share of the solvent-based paints market
compared to Kenya’s 30. 9 percent in the
same year. CW
