With African nations stepping up efforts to develop their own auto industries to take advantage of the removal of inter-African tariffs, Isuzu Motor and Toyota Motor will also increase production on the continent.

Mitsubishi will resume manufacturing operations in Africa after a hiatus of about 10 years and initially seek to develop a market in Kenya in cooperation with partners such as trading house Mitsubishi Corp, Takao Kato, president and CEO of the Japanese automaker, told Nikkei.

The company will examine the possibility of exporting vehicles to neighbouring countries in the future.

In Kenya, Mitsubishi Motors will produce its mainline pickup truck L200, sold as the Triton in markets such as Southeast Asia.

Production will be undertaken by Associated Vehicle Assemblers (Ava), which is producing vehicles on behalf of other automakers under the wing of major Kenyan auto sales company Simba.

Commanding more than 40% of the market for consigned auto production in Kenya, Ava will manufacture the L200 by assembling knocked-down parts imported from Mitsubishi’s plant in Thailand.

Mitsubishi plans to roll out some 200 units per year at the initial stage and boost the output by stages. The vehicles will be put on Simba’s sales network through the top Japanese trading house.

The automaker said it will launch production in Africa for the first time since it retreated from South Africa in fiscal 2011.

For the African market, Mitsubishi currently imports vehicles produced at its plant in Thailand.

While tariffs and excise taxes totalling more than 50% are imposed on motor vehicles imported to Kenya, those locally manufactured from knocked-down parts are exempted from the levies, the Japan External Trade Organization said.

As inter-African tariffs are expected to be eliminated in several years, Mitsubishi will raise the ratio of locally produced parts and examine the possibility of exporting vehicles to Kenya’s neighbours in the future.

Mitsubishi sold some 21,000 vehicles in Africa in fiscal 2021, about 2% of its global sales. The Triton, imported from Thailand, accounted for nearly 60% of the sales figure in Africa.

Mitsubishi envisions developing Africa into its second core market, after Southeast Asia, according to a medium-term management plan it adopted in 2020.

“We will plant seeds for future earnings through local production,” Kato said, suggesting that the automaker will vigorously develop the African market.

Given Africa’s long history of colonisation by France, Renault, a partner of Mitsubishi’s business alliance, has a high share of the local market. The French automaker produces a total of some 300,000 vehicles a year at its two plants in Morocco.

Nissan Motor, which holds a 34% stake in Mitsubishi, also has factories in African counties such as South Africa.

The tripartite alliance of Nissan, Mitsubishi and Renault is the largest automobile production group, with a combined market share of 19.7%, in South Africa, Kenya and four other major countries in Africa.

Mitsubishi hopes to make use of Renault’s production and marketing networks in Africa for its market development on the continent.

Used cars form the core of the auto market in Africa at present, estimated to be three to four times larger than the market for new cars.

Recently, however, South Africa, Kenya and other countries are starting to impose restrictions on imports of used cars, especially those emitting large amounts of noxious substances and carbon dioxide blamed for polluting air.

The move also reflects the countries’ wish to lure foreign automakers by eliminating used cars, analysts said.

Addressing a ceremony held by Mitsubishi on Tuesday, Kenyan President Uhuru Kenyatta said his government will promote the development of an auto industry and nurture parts suppliers.

African countries are trying to develop an auto industry against the background of the African Continental Free Trade Area agreement put into force in 2021.

Having 54 signatories – all of the African Union members except Eritrea – the agreement is aimed at creating a common market on the continent.

As it plans to eliminate 90% of tariffs within five years, African countries have set an eye toward becoming auto exporters to enjoy great benefits from the removal of tariffs.

The population of Africa is expected to double to 2.5 billion by 2050.

With the market for new cars on the continent also expected to expand thanks to the growth of the African economy, British research firm LMC Automotive has forecast that sales will roughly double from 2021 to 1.4 million units by 2030.

Although the market is small, the pace of projected growth is much faster than those of other markets such as Southeast Asia, forecast to expand 50% or so during the same period.

The elimination of tariffs and import restrictions on used cars will greatly contribute to African countries’ efforts to attract foreign automakers, said Masashi Okada, principal at the US-affiliated consultancy Arthur D. Little Japan.

Among other Japanese carmakers, Isuzu recently began to produce the new model of its principal pickup truck, D-Max, in South Africa. Starting sales in the country in May, it plans to export the vehicle to 34 countries, especially those in Africa.

To raise the local content ratio of parts, Isuzu spent 580 million South African rands (US$34 million) to finance the introduction of production facilities at local suppliers and other projects.

Also in Ghana, Toyota began the production of its Hilux pickup truck in 2021 at a new plant constructed by Toyota Tsusho, a trading house belonging to the Toyota group. Ghana is the fifth African country where Toyota has production facilities.

The new plant will also manufacture the Swift, a subcompact hatchback produced by Suzuki Motor, which has a capital tie-up agreement with Toyota.

Africa is said to be the world’s least developed market in terms of environmental regulations. Gasoline-engine vehicles will remain the mainstay of the auto market, as poor electric power conditions limit areas where electric vehicles are marketable.

“A shift to sales of new cars with high fuel efficiency serves as an environmental measure for now,” said Okada of Arthur D Little.

Mitsubishi, which is promoting plug-in hybrid and other environment-friendly vehicles in Southeast Asia, hopes to market them in Africa as well.