4.1. The African automotive market in booming
First, we need to bear in mind the financial capacity of West African people. This varies enormously from country to country. With the exception of those who have benefited from the oil windfall but who are also subject to fluctuating oil prices, most have limited resources. With this in mind, analyzing the flow of used vehicles requires access to accurate data.
In Africa, such data are practically nonexistent and must be reconstructed with a certain degree of uncertainty. The analysis is based on the data compiled each year by the International Organization of Motor Vehicle Manufacturers (OICA), which clearly states that these data are estimates rather than hard facts. On a global level, automobile production is greater in emerging countries than in developed countries (Fig. 1).
On the other hand, automobile production in Africa is very low compared to that in other parts of the world (Fig. 2).
On the African continent as a whole, only a few countries (South Africa and Morocco) stand out, producing far greater volumes of vehicles than other African countries (Fig. 3).
Using World Bank data, expressed in purchasing power parity-adjusted U.S. dollars, demonstrates a substantial picture of the situation in 2016 but is still relevant in terms of magnitude. (Fig. 4).
Although far removed from the figures for car fleets in northern countries, the statistics for West Africa are perceptible (Fig. 5).
They reveal major disparities between states and the undeniable weight of Nigeria in West Africa, even if the comparison proposed in the map with North Africa shows the gap that remains between the two shores of the Sahara.
This situation calls for further comments to help orient West Africa in the world's vehicle fleets. The proportion of commercial vehicles used for goods transportation or for public transport remains high, a sign of less individualization of the fleet, which is linked to the lower financial capacity of individuals. This is a sign of the ease with which a sustainable and resilient transport system can be built. Around an African average of 31% and a world average of 26%, West Africa is above these averages: seven (7) states are above the world average, and 6 are above the African average, with a record for Liberia (Fig. 6).
Although it is difficult to analyze this situation on a case-by-case basis, commercial vehicles are a major development tool, and their market is clearly promising for the future. The existing fleet is aging and no longer meets the standards that are gradually being imposed and the requirements of the major global operators who control door-to-door logistics chains.
An analysis of data published by OICA (2017) revealed diversified growth in African vehicle fleets (Fig. 6). The average growth in Africa (73%) was greater than the global average (43%) between 2005 and 2016.
Although African countries started from a very low basis, this vigorous performance clearly demonstrates Africa's overall dynamism in the global economy and points to positive scenarios for the future. Ghana, Madagascar, Tanzania, Angola and Burkina Faso have the highest rates, far ahead of Nigeria, which nevertheless has an above-average rate. This could be explained by the fact that the volume of the existing Nigerian vehicle fleet is already very high, especially given that this country has hosted car assembly plants in the past, which may reduce the fleet renewal ratio. The country's recent crisis may also provide an additional element of explanation. In regard to West African countries, the ranking reveals a few surprises, given the commonly accepted images of Africa. Ghana enjoys a high degree of stability and openness, which is conducive to growth. Burkina Faso behaves as a stranger in this good position.
Poverty, recent instability and the geopolitical crisis that concerns it should be favorable to slower growth, but growth is always relative, and the starting point was very low. Côte d'Ivoire, which has regained a degree of prosperity, even if all the after-effects of the years of near-civil war have not yet been fully resolved, suffered from the downturn of the 2000s, and its car fleet did not enjoy the growth it should have and is now enjoying again (Fig. 7).
However, it is now picking up again, with the SOTRA now operating assembly lines for new vehicles "made in Côte d'Ivoire" to fill the gap.
These comments need to be qualified by taking into account the resident population. The classic calculation, which establishes the number of vehicles on the road per 1,000 inhabitants, provides a completely different picture (Figs. 8 & 9).
Admittedly, West African countries are not the best equipped in the whole of Africa, but some have achieved rates close to African averages, even if they remain far from world averages. Senegal and Côte d'Ivoire are equipped with vehicles in Africa, with an average of approximately 45 vehicles per 1,000 inhabitants. All the others are below this average.
This ranking seems consistent with our field observations and could be justified by the quality of road infrastructure, efforts to comply with age limit standards for imported vehicles, the health of the national economy, direct access to port services and the working population in these countries. In fact, all the reference countries have a port, and the landlocked countries come last. Nigeria's position is linked to its large population and the permanent inaccuracy of its data.
Furthermore, at the global level, Europe dominated the population motorization ranking in 2015, a situation confirmed in 2020 with a 2% annual average growth rate, while Africa occupied the last place, with an average annual growth rate equal to the global average of 4% (Fig. 10).
However, at the African level, Libya dominates all other countries, with a population motorization level very close to that of Europe and an additional 4% annual average growth rate. All other countries are below the world average of 209,000 vehicles per 1,000 inhabitants. Nigeria in West Africa is above the African average, with an annual average growth rate of 5% (Fig. 11).
This suggests that there is considerable scope for growth in used vehicle flows over the coming years. The potential origins are also clearly identified: Europe and North America.
The growth of African car fleets is partly due to the purchase of new vehicles. Africa still accounts for only 2% of global sales. West Africa weighs even less. Nigeria stands out, but with only 0.03% of the world market. Fluctuations can appear abruptly, as in the case of Ghana. The others, at very low levels, are slightly more stable. The outlook is for growth, but for the time being, it is clear that the purchase of nonnew vehicles remains the driving force behind the gradual progress of these countries (Fig. 12).
The contribution of used vehicle purchases to fleet growth is very high. Between 2005 and 2015, it accounted for more than 60% of the total fleet growth in West African countries (Fig. 13), with values often exceeding 75%.
The secondhand car market therefore has excellent development prospects in the years ahead. However, the real question remains as to the characteristics of vehicles used by the increasingly important emerging middle classes. The continent's economically powerful countries are those that buy more new vehicles. These include South Africa, Egypt, Algeria, Morocco and Libya. They are all outside the study zone of this survey.
In conclusion, used cars are making a significant contribution to fleet renewal in sub-Saharan Africa, creating a high-potential, booming market in view of the high growth rates observed and the emergence of middle social classes with substantial purchasing power (Lihoussou & Limbourg, 2022).
4.2. A complex and highly organized vehicle market
In addition to the market for nonnew vehicles, there is a directly related market for spare parts. Importers/exporters of spare parts load them on board used vehicles. In this way, they pay only for the sea freight associated with the vehicle. They may also load them with other cargo in the form of miscellaneous, often containerized, goods. This global market is highly competitive, characterized by an oligopolistic structure of maritime actors and dominated by a few powerful forwarding agents. The most numerous actors in the market are the "middlemen", who collect the vehicles and sell them to garages or exporters. The latter then ships vehicles via freight forwarders, of which there are only a few. They use even fewer shipping companies. For the entire industry, concentration in the hands of Lebanese operators has long been the rule. They are omnipresent from the beginning to the final step, particularly in the management of used vehicle fleets at destination ports, and are organized in networks, most of which are family owned.
This dominance is still evident in ports such as Cotonou and Lome. In contrast, local African actors are emerging, especially in Dakar, Abidjan, Accra, Douala and Libreville, and are gradually changing the way the industry is organized.
There are two groups of actors. The upstream link is the European link, and the downstream link is the African link to the final customer. However, there are many actors involved in the entire supply chain, both in Europe and in Africa. The main upstream actors are the direct marketer and seller, the garage or professional seller, the exporter, the forwarding agent, customs, the shipping line or shipping company.
- Direct seller and middleman
The direct seller is an individual, household or trader who comes directly to sell his car to an exporter or garage. The direct seller is an intermediary between the individual seller and the exporter or garage. It starts with two coded words "for sale". If an agreement is reached, the vehicle is delivered by the direct seller to a partner who buys it by paying the vehicle owner and the direct seller a variable commission reaching 100 and 300 euros per vehicle, depending on the amount negotiated. This link in the chain is run almost exclusively by the African community of very diverse nationalities. Each group of canvassers tries to earn the loyalty of their counterparts through ethnic, sociocultural and family ties. They may stand at crossroads or wander around the Heyvaert district of Brussels all day, for example, in search of bargains.
Although there are many similarities with the situation in Brussels, in the ‘Ile-de-France’ region and in Aubervilliers, for example, vehicle collection is carried out mainly via the internet, from garages or private individuals. One of the main reasons for this uniqueness is the number and regularity of police around up checking residence permits, which hampers street transactions. However, as in Brussels, middlemen are collecting vehicle force for garages. However, many of them indeed turn to exporters.
- Garage or Professional Seller
Garages are legally constituted businesses. They buy vehicles from all sources and resell them to a wide range of customers. They have showrooms, large storage areas and a solid financial base to support their business. At the customer's request, they can take care of all the formalities involved in shipping the vehicle to the forwarding agent. As they have to bear the costs of running their business (lease, staff, fluids, taxes, etc.), their selling price is often slightly higher than that obtained by direct purchase.
In reality, exporters stand as the main actors. They are original or legal persons who reside in Africa or Europe or who regularly commute between the two. He or she buys and exports vehicles from Europe to Africa. As such, he/she is in constant contact with one or all of the above stakeholders, as well as with his/her agent, the forwarder.
As a key actor in the logistics chain, the freight forwarder is an intermediary or agent for the exporter. He takes charge of the cargo from the exporter and handles the precarriage from Brussels to Antwerp, Paris to Antwerp or Paris to Le Havre, using car transporter trucks with a 4x2 axe configuration and a capacity of up to 8 or 9 vehicles. He or she acts as an intermediary between the export customer and the shipping line. It draws up the consignment note, assists the customer in securing the goods loaded on board the vehicle, and handles all the administrative and customs formalities required for shipping. They have a fleet of vehicles at their disposal and organize more or less regular shipping to the port, depending on the capacity of their fleet and, above all, on ship departures to West Africa. Some forwarders collect all freight in Europe to avoid the risk of nonpayment, while others collect it at destinations in a variety of ways. The latter option is designed to enable the customer to export more used vehicles without having to advance funds, which can be very high for large shipping. Freight is then paid according to sales on the destination market, all these actions in limited time, which can sometimes lead to seizures and judicial sales if the debtor defaults. This relies on the trust gained from years of working together. Some forwarding agents finance and control the links in the course of the chain. This is generally motivated in the sense of the sake of vertical integration through showrooms, the hosting of garages and the financing of certain customers.
Shipping companies assure sea transport with cargo by making ships available to freight forwarders, who pay freight charges. The shipping company owns a charging quay to receive bulk storage and loading cargos. It also owns a branch within the port of destination or appoints a representative managing the transit. The most important shipping company for this type of traffic is the Grimaldi Group. However, they face competitive companies chartering mixed ships.
- Customs and administrative facilities (public services)
The customs administration addresses the regulatory aspects of shipping and tax collection. It works mainly with freight forwarders, by declaring goods and paying customs duties but also with shipping lines for various controls. Its contribution to trade facilitation is a real asset in the choice of destination port. Fig. 14 below summarizes the complexity of this sector.
4.3. The oligopolistic organization of the maritime vehicle market
Two shipping companies (Grimaldi and Sallaum) currently dominate the market, with total annual traffic estimated at 400,000 and 450,000 vehicles per year in Antwerp, of which approximately 50% come from Brussels. ERL, which operated at the beginning of the study, no longer existed. The remainder of the market (approximately 3%) is contested by III King, IMS, Abou Merhi, and others. Similarly, with the exception of a few rare cases, each group of forwarder ship vehicles under exclusive agreements with a single shipping line is as follows:
- Grimaldi : Belgo-Malienne, Socar, Facar, IMS, Nord-Sud Transit, Zeaiter, III King.
- Sallaum: Abou-Zeid, Sallaum Export Center, IMS, Zeaiter.
Agreements are negotiated between shipping lines to allocate space on one line's vessels for the benefit of another, especially in delicate phases of reduced traffic, as was the case in 2016.
As far as transit companies are concerned, although statistics are truly inaccessible, the actors involved and interviewed establish a subjective and variable ranking of the main operators. Our surveys enable us to organize this market around the powerful forwarding agents Abou-Zeid, Nord-Sud Transit, Karim Export, Belgo-Malienne, IMS, SOCAR, Zeaiter and Sallaum Export. It is important to note that the same forwarding companies control the market in Brussels, Antwerp and Ile-de-France. They are run predominantly by Lebanese managers, who operate in family networks. In Africa, they are strongly involved in the allocation of used vehicle fleet management and control local markets. However, local African actors are emerging, especially in Nigeria, Côte d'Ivoire, Cameroon, Ghana and Senegal.
The rates charged and displayed by the forwarder include the cost of road precarriage (Brussels to Antwerp, Ile-de-France to Antwerp or Ile-de-France to Le Havre), customs duties, other administrative formalities (e.g., insurance), sea freight and the forwarder's margin. Rates vary according to whether the vehicle is lightweight, a classic van or minivan (category 1, less than 2 meters high), a large van (minibus) or a truck (category 2), expressed in linear meters (lm).
The frequency of ship departures is in fact the most decisive variable in the choice of port of departure and forwarder. Once the transit-time issue has been settled, the attention is turned to pricing. Price differences for the same destination are not very decisive, as they are cheap even if they do exist. However, some forwarding agents, who are leaders at given destinations, generate larger volumes than others in these ways. This enables them to obtain highly preferential rates from the shipping line to which they are linked at these destinations. Being able to obtain more competitive fares in their preferred way, operators are able to retain their customers and win new ones. The shipping line with which it has agreements gains by securing economies of scale through a reduction in its unit margin. This is the case, for example, for Zeaiter from Brussels/Antwerp and Nord-Sud Transit from Ile-de-France/Antwerp to Abidjan, Dakar and Conakry; Belgo-Malienne to Cotonou, Lagos and Lome; and III King to Douala and Sallaum Export Center to Pointe-Noire. The surveys enabled us to specify the average cost chain for transporting a vehicle via Brussels and Antwerp (Table 2).
Table 2: Average supply chain costs via Brussels/Antwerp (in euros)
Actors
|
Average cost
|
Middleman
|
100 – 300 €
|
Garage
|
300 – 500 €
|
Customs and taxes
|
25 € (10 €+15 €)
|
Road Carrier Fees
|
35 - 40 €
|
Freight Forwarder charges
|
40 – 100 €
|
Shipping line marging
|
25 -100 €
|
Average cost
|
525 € - 1065 €
|
source: Investigation data, from July 2016 to May 2017
With regard to sea freight, average prices observed from September 2016 to August 2017 reveal wide disparities between destinations, not only in terms of distance but also by considering many other parameters, such as the size of flows, the frequency of services, the geopolitical situation and sometimes the erratic evolution of sea freight rates (Tables 3 & 4).
Table 3: Maritime freight Brussels via Anvers (in euros)
Destination Ports
|
Cars
|
Buses
|
Heavy Buses
|
Trucks (ml)
|
Dakar
|
336
|
443
|
940
|
295
|
Conakry
|
428
|
565
|
1350
|
405
|
Freetown
|
603
|
813
|
1635
|
530
|
Abidjan
|
289
|
398
|
990
|
270
|
Tema
|
398
|
498
|
1265
|
370
|
Lomé
|
289
|
379
|
860
|
350
|
Cotonou
|
294
|
383
|
860
|
280
|
Lagos
|
401
|
496
|
980
|
370
|
Douala
|
318
|
413
|
1030
|
235
|
Pointe Noire
|
476
|
569
|
1467
|
410
|
Libreville
|
695
|
815
|
1750
|
560
|
Luanda
|
750
|
850
|
2000
|
|
Bata
|
715
|
815
|
1600
|
575
|
Malabo
|
765
|
865
|
1600
|
600
|
Source: Investigation data from July 2016 to May 2017.
Table 4: Maritime freight from Ile-de-France (Paris) to West Africa (in euros)
Destination Ports
|
Africap
|
Nord Sud Transit
|
Louise Transport
|
Afrique Transit Express
|
Average cost
|
Abidjan
|
550
|
400
|
450
|
480
|
470
|
Cotonou
|
500
|
400
|
450
|
450
|
450
|
Conakry
|
620
|
550
|
530
|
550
|
563
|
Dakar
|
500
|
400
|
450
|
450
|
450
|
Douala
|
550
|
450
|
520
|
460
|
495
|
Lagos
|
620
|
650
|
700
|
530
|
625
|
Libreville
|
940
|
|
790
|
|
865
|
Lomé
|
540
|
500
|
480
|
470
|
498
|
Tema
|
650
|
|
700
|
530
|
627
|
source: Investigation data, from July 2016 to May 2017
Field surveys from June to October 2023 show that several shipping lines have reduced their Ro-Ro services to West Africa in favor of Asia-Europe flows of new electric vehicles and that, paradoxically, European households are increasingly keeping their old vehicles for fear of the risks inherent in new technology. The result is an increase in sea freight and in the purchase costs of imported used vehicles. The resumption of maritime traffic in the wake of socioeconomic disruptions caused by the COVID-19 pandemic and the Ukraine-Russia war could also explain these new rates, as shown in Table 5 below.
Table 5: Actual maritime freight from Ile-de-France (Paris) to West Africa (in euros)
Destination Ports
|
Transit Time
|
Cars
|
4 X 4
|
Buses (Small Van)
|
Heavy Buses (Big Van)
|
Abidjan
|
12
|
750
|
910
|
990
|
1690
|
Conakry
|
13
|
740
|
860
|
950
|
1750
|
Cotonou
|
12
|
715
|
840
|
900
|
1640
|
Dakar
|
14
|
670/740
|
770/840
|
870/990
|
1500
|
Douala
|
25
|
690/800
|
790/900
|
930/990
|
1900
|
Lagos
|
14
|
750
|
1030
|
1140
|
1800
|
Lome
|
15
|
690
|
790
|
890
|
1650
|
Nouakchott
|
14
|
1020
|
1135
|
1240
|
see cotation
|
Pointe-Noire
|
26
|
1000
|
1110
|
1210
|
2320
|
Tema
|
18
|
930
|
980
|
1120
|
see cotation
|
Source: Data collected on Nord-Sud Transit Website (May 2023)