Nissan Fulfilling Kenya’s Motor City Ambitions

  • Nissan sales in Africa increased 11.7% in Q3
  • In 2014, Africa had 35 vehicles per thousand people

While Nissan (NSANY:US -0.24%) struggles to respond to softened demand for its vehicles in North America, the automaker has big plans for Kenya. Nissan plans to invest at least $100 million in a light pick-up truck assembly plant in Kenya. Could the country develop the Motor City of East Africa?

Why This Matters: As disposable incomes rise in Kenya consumers want more vehicles. Automakers like Nissan, Volkswagen AG (VLKAY +0.07%), and Peugeot SA (PEUGF -2.03%) are preparing themselves for this increased demand. Nissan sales in Africa increased 11.7% in Q3, totalling 70,000 units. In the same quarter, the company’s North America sales decreased 1.4% to more than 1.5 million units.

While demand for vehicles grow in African markets, albeit from a low starting point, the opposite is taking place in North America as the sharing economy takes hold. In 2014, Africa had 35 vehicles per thousand people, an increase from 23 in 2004. In North America, this figure is on a downward trend with 816 vehicles per thousand people in 2014, a decrease from nearly 830 in 2004.

Situational Awareness: The battle for auto manufacturing dominance between Kenya and South Africa is now in full swing. Currently, South Africa has been leading the industry on the continent for decades, but proposed changes to its development policy endanger this status. The country is considering increasing the amount of local content required for automakers to qualify for export credits. Manufacturers like BMW (BMWYY -0.47%), Ford (F +0.63%), and Daimler AG (DDAIF -0.13%) have warned this could negatively impact their investment in South Africa. This opens the door for Kenya which has aims of being the leading vehicle provider to the East African market.

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