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Deloitte’s Covid-19 shows African auto sector in severe shock by Mike Ochonma

Covid-19 global crisis is hitting hard on the African automotive sector with mounting volatility at all levels of its value chain, says a Deloitte Covid-19 survey, titled The Economic Impact of the Automotive Value Chain (AVC).

Stakeholders across the sector, from traditional original equipment manufacturers (OEMs, or vehicle manufacturers), new entrant automakers, dealerships, suppliers and financial services providers are going to have to evolve and act immediately to succeed in the face of the pandemic.

The survey included 127 respondents from four industry associations representing the AVC across Africa. 

“The automotive sector is one of the pillars of a country’s economy and is facing shocks at all levels. All players must rapidly evaluate the influence of the pandemic and take the required action to overcome its challenges, hand-in-hand with customers and employees”. Says Deloitte Africa automotive sector leader  Martyn Davies.

Findings from our survey indicate that Covid-19 brings with it an opportunity for the AVC processes to innovate, to become more customer centric and serve the needs of the market during this period and coming out of it, adds Adheesh Ori; Deloitte Africa automotive strategy lead.

Deloitte report says that the state of play of the AVC was already under pressure prior to the pandemic, with 66 percent of respondents reporting a decline in earnings and 57 percent already focusing on new ways of working, changing operating models and developing cost-saving initiatives. 

“Strategic innovation and digital transformation have expanded the way in which the automotive sector in Africa thinks about how to operate and why,” says Ori.

Ori added that, for Africans, there are local nuances that demand a shift in operating models and strategies for the future. Survey findings revealed that only 12 percent of businesses are looking to spend 50 percent and upward of their investments on strategy and innovation. It remains unclear which businesses will still be around in the next five to ten years.

A change in operating models and implementing new digital ways of working remain an area for growth.

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