NISSAN AFRICA: Capitalising on the ‘Last Automotive Frontier’

For most, the potential of Africa as an economic case is undoubted. 54 countries with much untapped potential, both in terms of market opportunities as well as human capital and innovation. Home to a major part of the world’s population, but receiving comparatively miniscule total investment, it’s obvious that the continent’s only direction is up – as long as effective management, intraregional trade, and industrialisation is allowed to thrive.

In his 2013 book, ‘Emerging Africa: How the Global Economy’s ‘Last Frontier’ Can Prosper and Matter’, former Deputy Governor of the Central Bank of Nigeria and Politician, Kingsley Moghalu stated that the last frontier was effectively a view of the continent as an extension of globalisation and a spread of wealth away from the traditional centres in Europe and North America. He suggested that Africa had caught the imagination of the world, not as a basket case, but as part of the world where people can legitimately aspire to be prosperous, where there are opportunities, where business can be done, and good money made – “in short, a normal part of the world”. Africa has a rising consumer class and there is a huge shift in middle class growth, making for more people with spending power and creating huge opportunities for international trade.

But only a few industries, and fewer companies, have the scale and ability to take advantage of such a mix of markets and such a blend of cultures. However, those with ambitions are reaping rewards, building brands with lasting impact, and driving loyalty across this last frontier.

Nissan, one of the world’s largest automotive businesses – and part of the one of the world’s most powerful automotive organisations in the Renault-Nissan-Mitsubishi Alliance – has been serving Africa and growing on the continent for decades. Both small, inner-city cars and larger pick-up class vehicles have become hugely popular, with the brand recognised for reliability and quality.

AFRICAN BUSINESS

A recent reorganisation of the business in Africa means that the continent receives an even spread of attention as the automaker looks beyond the traditionally larger markets for further growth opportunities. As well as boosting its own prospects, the company is highly involved, alongside competitors, in the wider development of the auto industry across Africa.

Mike Whitfield, Managing Director of the Nissan Africa Regional Business Unit, tells Enterprise Africa that the benefits of a thriving auto sector are clear for Africa, and Nissan intends to drive this development.

“What we have created, as the only OEM in both north and south, is an African business unit that looks after 52 smaller markets as well as major markets of South Africa and Egypt. We as an industry see Africa as the last automotive frontier. Today, there is a scenario where 1.3% of total global vehicle sales happen in Africa, but we have close to 17% of the total global population. If you look at Africa, you have 43 vehicles per 1000 against the global average of 182. Simply, there is huge opportunity in Africa.”

In South Africa alone, where the industry enjoys a healthy position with many international operators, the impact on the economy is clear. 470,000 people are directly employed by the motor industry and three times that across the value chain. In 2019, 7.1% of GDP in South Africa came from automotive with R14.3 billion in exports. “It’s a massive part of the economy and when it is done properly it can really contribute,” states Whitfield.

He cites the establishment of the African Continental Free Trade Area (AfCFTA) as a major win for business in Africa. Through this specialised strategic framework, the automotive industry sector is able to localise value chains while providing benefits for African participants whatever area they are in.

“There is huge opportunity,” he says, “but nothing will happen unless Africa works together to see how we can create inter-regional trade, and that links to the AfCFTA. Within that, automotive which is seen as a key industry to work on to help the industrialisation and manufacturing activities grow in Africa. Automotive has a significant value chain which creates skills and jobs and opportunities for participation in the economic sector that will grow. It requires cooperation and it must be complimentary but there is much progress being made around the value chain and rules of origin. As an industry, through the AAAM and the Secretariat of the AfCFTA and the Afreximbank and other stakeholders, we are working together to define the rules of origin and we are close to getting that finalised.”

Today, a significant portion of raw rubber comes from West Africa but “nowhere in West Africa is there a plant that manufactures tyre or wiper blades. The idea is to take the raw rubber and add value,” says Whitfield. Copper is mined in Zambia and Congo before ending up in China and being made into electric wire that goes into wiper motor before coming back to Africa to go into a final product, he explains, adding that “it is important that we understand the value chain and realise that by 2035, the market will be closer to four or five million vehicles and our objective is to have a big percentage of those vehicles built in Africa with components from Africa so that we can grow the manufacturing and industrialisation of the continent. Looking at India as an example, there is no reason why we can’t get there.”

India’s population sits at around 1.4 billion people – much like Africa – and GDP per capita is roughly the same as the average in Africa, yet India produces and has a market close to 4.1 million vehicles per year compared to 1.2 million in Africa. For Nissan and Whitfield, taking advantage of the AfCFTA to create a positive balance of trade is a must for the industry in Africa.

“Right now, the majority of Forex usage on the continent is going to buy vehicles and forms of transport that are made outside of the continent. We need to keep that inside of Africa as there are huge numbers of used vehicles coming into Africa that don’t meet safety or other standards – we all have to drive for safer mobility.”

NAVARA LAUNCHED

Nissan has grown its African presence significantly over the past decade. Initially opening up manufacturing operations in South Africa in 1961 (although Datsuns were imported through the 50s), the company has sold into all countries and boasts premier facilities in Rosslyn, Gauteng and 6th October Industrial City outside of Cairo (the only global OEM with a 100% owned investment in Egypt). Nissan also manages a semi-knocked-down (SKD) operation in Nigeria and is about to open a second SKD facility in Ghana.

Recent coups for South African manufacturing include a deal to build the Nissan Navara – a light commercial utility pickup truck, popular in markets around the world. Local manufacturing, which began in June 2021, has been hailed by the company as a product ‘built in Africa for Africa’. In February 2022, the African-made Navara arrived in Nigerian showrooms from the Rosslyn plant, which received R3 billion investment over the past three years.

“Our all-new Nissan Navara, the best we have ever made, is literally built of more: it hasn’t just been tropicalised, it has a reinforced chassis, the suspension is different and the roll over angle is the best in the market,” said Nissan’s Sales Director for sub-Saharan Africa, Hide Kuwayama.

“We manufacture the new Navara pick up and the NP200 for both South Africa and Africa. In the case of the Navara, it’s both left- and right-hand drive, single or double-cab. On site, we have around 2400 people daily, including all Nissan staff, sub-contractors, and service providers. We also operate into sub-Saharan Africa from Rosslyn, and we have around 116 independent dealers spread across South Africa. We also have independent national sales companies operating through the rest of sub-Sahara,” said Whitfield of the impressive Nissan Africa footprint.

In April 2021, South Africa welcomed the Nissan Magnite – a compact SUV packed with features and designed to separate it from anything else in the segment. In January 2022, In Egypt, Nissan introduced the third-generation Qashqai to its SUV range. As the first market in Africa to receive the all-new Qashqai, leaders in the Egyptian business were sure that state-of-the-art safety features, leading comfort and performance stats, and feature-packed design would be attractive.

The pandemic slowed Nissan’s rollout pace across the continent, but the company countered by investing heavily in tech and digital solutions to prep for a future where customers demand more open communication channels between manufacturing, distribution, sales, and end user.

NAME OF THE GAME: AGILITY

“We have a great team, and it has created a lot of opportunities to take on African responsibility as opposed to just South Africa or Egypt,” says Whitfield. “We have two great Managing Directors for both of those units, and the reality was that with Covid we have all been faced with the same challenges. We have had to adapt very fast, and agility has been the name of the game. Covid is a reality and have to live with it going forward. We are certainly not going to work the same way we did before. Work from home is part of our overall strategy but that doesn’t mean everyone at home all the time. We like flexible working, and we mix and match working patterns.”  

He adds that the main issues faced as a result of the pandemic surround supply chain and logistics, as well as protection of employee health. The company offered a vaccination drive among all employees, families, and locals, and continues to educate around importance of vaccines. With shipping costs rising, fuel pricing, and container availability heavily impacted, global companies have been forced to adapt. The semi-conductor crisis has also hit automakers hard, but Whitfield sees this as a short-term problem that will be rectified.

“It makes it very difficult to forecast what you can build in the longer-term – we are living on a very short horizon with that. It will come right, but it will certainly take time before we start seeing that.

“Having operated within Africa for so long,” he continues “we have always realised the need for agility. It is something that is a key attribute of the Nissan team as there are often changing political, economic and social environments. The volatility in exchange rates will remain, and Covid has brought that to the fore, and that agility helps African businesses operate a lot better. We have had delays and there have been stock shortages, but we continue to manage within the parameters while being flexible going forward.”

From a business and workflow point of view, the company has taken a focus on digital and is busy upgrading technology capabilities to ensure that it is prepared for a market that is embracing a new ‘shop from home’ culture.

AMBITION 2030

At the end of 2021, Nissan unveiled its new company-wide vision, labelled Ambition 2030. Defining strategies around electrification, model development, battery power, and future mobility solutions, this plan was delivered by Nissan CEO Makoto Uchida. Undoubtedly, Covid-19 has influenced the timescales and outlooks within Ambition 2030 but, ultimately, the company’s core purpose of enriching people’s lives remains.

“The overall and core philosophy in the company is people. People have to come first, especially around safety and what we did was put together a task team across multiple areas to see how we could provide support during the pandemic,” says Whitfield.

The launch of Ambition 2030, in line with the company’s aim to be carbon neutral across the lifecycle of its products by 2050, comes from the demands of people. People are on the hunt for brands that share values around the environment and sustainability, and transitioning to an electric future is key for Nissan. The reality of electrification of the automotive industry in Africa has often been questioned, but Whitfield – active in the company and industry for four decades – is certain progress will accelerate.

“I don’t believe Africa will lead in electrification, but it will certainly follow. It is a global phenomenon and Africa will, without doubt, play a role. It cannot be part of the value chain going forward if we do not move in that direction.

“A key issue is around the future of technology. For us, our long-term vision sees us moving to a more progressive future which looks at bringing a whole range of mobility together. There is a strong move towards electric and other technologies so we will see a mix of 50% electric across our brands with 23 new electric models coming to the market between now and 2030. We are going to be spending close to ¥2 trillion on this ambition and for us, that is our future, capitalising on change.”

This message is reiterated in the company’s approach to its structure. Nissan has taken active steps in diversifying its employee base and leadership make up. The company has seen an increase in female management globally from 6.7% in 2008 to 13.9% in 2020 and is targeting further improvements by 2025.

“I believe strongly in building a diversified team, not only in terms of gender and race, but also in attributes,” says Whitfield. “You can’t only build a team of optimists – you must have a balance. I am not in favour of a hierarchical organisation, and I believe everyone can contribute from wherever you are in an organisation. You have to create a belief that people can contribute so they feel enabled and empowered. Criticism must be constructive rather than destructive and one needs to create an environment that allows people to show their true potential as we will move forward to a system that sees people working together on a cross-functional basis. We see, as business develops, that the issue of cross-functionality and cross-cultural becomes critical.

“When we established Nissan Africa,” he adds “we brought two very different cultures together from South Africa and Egypt. It has been interesting to see two cultures mix for a common purpose and you must have an openness so that people can have their say and challenge in a constructive way – transparency is critical.”

With a seasoned, expert team in place to lead growth in Africa, and a strategy that incorporates the entire continent, Nissan is targeting first-mover-advantage on the automotive last frontier. Introducing new technology faster, connecting with consumers smarter, and providing products that are top of class – manufactured in Africa through an African value chain – Nissan’s intentions to dominate on the continent are clear.

For Whitfield, this is just the start of a very exciting journey.

“What you do, you must enjoy doing. I’m happy with everything that we are doing and enthusiastic about future ambitions on the continent,” he concludes.