VDA Cluster International Association Partnerships Africa & India

The association partnership between the African Association of Automotive Manufacturers (AAAM) and the VDA aims to support the development of the partner association and to jointly improve the framework conditions for the automotive industry on the African continent. The cooperation is funded by the Federal Ministry for Economic Cooperation and Development (BMZ) as part of the “Special Initiative (SI) Jobs.”

Whether vehicle financing, alternative drive systems, trade and logistics, location search or political frame- work conditions, the VDA and AAAM are cooperating in a wide range of areas. Working groups have been jointly initiated on these topics, in which representatives of the VDA, AAAM and member companies work together. Since Africa is home to around half of the 20 fastest-growing economies, the continent is becoming increasingly important – Especially with regard to geopolitical changes, commodity partnerships between Africa and Europe and the diversification of supply chains. Areas such as the digital economy or sustainable mobility also have high development potential. The automobile and logistics sector has a key position due to its sustainable value creation in supplier networks, assembly plants, distribution structures and pan-African trade relations, and offers great innovation, growth and job potential. Currently, the African automotive market is still comparatively small, with sales of about 1 million vehicles per year, but the partner association AAAM forecasts an increase to about 5 million vehicles per year by 2035.

Intra-African trade is promoted by the pan-African free trade area “African Continental Free Trade Area – (AfCFTA) launched in 2021. The main objectives of the AfCFTA agreement are to increase intra-African trade, further industrialization and build regional value chains. In the long term, the African Union is striving for a continental customs union and a single African market with free movement of goods, services and people.

As cooperation between Africa and Europe is of great importance, on the initiative of the VDA, AAAM and other partners, a total of twelve European and African automotive associations have signed a joint declaration of intent and agreed on future cooperation. In view of the European Union’s “Global Gateway Initiative,” the VDA’s commitment fits in well with the times.

VDA members benefit from the cooperation project, for example, through information offers, delegation trips and the establishment of contacts with relevant stakeholders on the African continent.

Through the project, the VDA has its own contact persons in Berlin, in the VDA-AAAM project office in Johannesburg, South Africa, and a contact person in Accra, Ghana. The project has been implemented in the first project phase since summer 2020 and currently runs until December 2023. The VDA is working intensively on a continuation of the project in order to further deepen the cooperation with the African partners and to contribute to the development of a sustainable African automotive industry.

India is an important and reliable partner both for the German automotive industry and for German development cooperation. As an emerging developing country and important growth market, India offers immense potential not only in the automotive sector, but also with regard to energy and raw materials partnerships. The rapprochement that took place in 2021 in the negotiations of an EU-India free trade agreement, mutual visits by high-ranking politicians and the established German-Indian intergovernmental consultations have once again underlined the importance of German-Indian cooperation.

Today, German manufacturers and suppliers are already represented in India with more than 100 sites and production facilities, contributing to the sustainable development of the local automobile industry. World- wide, India is the third largest passenger car market. In 2022 close to 3.8 million passenger cars were sold in India. Germany is India’s largest trading partner in Europe and is one of India’s ten largest global trading partners.

The VDA has been successfully cooperating with the two Indian automotive associations Automotive Component Manufacturer Association (ACMA) and the Society of Indian Automobile Manufactures (SIAM) since 2005. Based on the “Indo-German Working Group on Automotive,” which was established over 10 years ago, and the traditional “IAA India Day,” the official association partnership, which has been in existence since 2017, sets new accents for cooperation: With the support of the German Federal Ministry for Economic Cooperation and Development (BMZ) and sequa gGmbH, the association partnership between VDA, ACMA and SIAM uses the potential in India to promote bilateral exchange between the players in the automotive industry, enable small and medium-sized enterprises to access the global market and improve the competitiveness of Indian companies.

Within the framework of conferences, workshops and joint studies, an intensive exchange on the future topics of the industry, including in particular electromobility, alternative fuels, autonomous driving, digitalization and start-ups, is conducted with the involvement of member companies from both countries. In 2021 alone, the VDA, together with its Indian partners ACMA and SIAM, held 25 events on relevant topics of the industry dialogue. Free and fair trade between the two countries, the resumption of negotiations for a free trade agreement and resilience in supply chains are also topics of the partnership.

Despite positive developments, Indo-German cooperation in the automotive sector faces challenges,  for example in the area of technical regulations. The current quality control regulations for safety glass and wheel rims require a labelling and audit procedure that doubles the certification effort in India. The VDA was able to lobby on behalf of its members for a postponement of the entry into force of various regulations. In addition, VDA members benefit from the cooperation project, for example through information offers, delegation trips and contacts with relevant stakeholders in India. Through the project, the VDA has its own contact in Berlin and its own contact in the project office in New Delhi.

The cooperation with the sister associations ACMA and SIAM is in its second and last project phase until Mid-year 2023. The VDA is working intensively on continuing the project even after the funding has expired, in order to further deepen the association partnership with India and to be able to make a contribution to climate protection and technological development together with its partners in India.