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Zambia Auto

BMI see strong signs of significant growth in the Zambian autos industry, thanks to a slew of industryspecific and macroeconomic developments taking place in the country. In addition to the increasing affordability among private consumers, we expect the trend of falling fuel prices to act as a major driver of vehicle demand in Zambia in the medium and longer term. Local news sources have reported that the fuel prices in the country are set to drop by as much as 30% as result of a US$3.3bn investment in new oil pipeline and refinery in Ndola.

More help will also come from the increasing presence of more economically priced Chinese cars in the markets. BMI expects the presence of Chinese brands in Zambia to be strengthened by the signing of bilateral agreements between the two countries in March 2012. This comes alongside a potential Chinese interest in carrying out bus production in Zambia, which has partly been triggered by the Zambian government's assistance in providing land for the project and the fact that customs duties in Zambia are suspended for five years on equipment used to manufacture motor vehicles and motorcycles.

Meanwhile, we expect regulations calling for used imported vehicles to meet specific safety standards to further provide upside for new vehicle demand in the country. Such regulations partly help reduce the price differential between used and new cars and possibly turn consumer preference towards new cars.

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