A Bloomberg article last month reported that “Porsche AG is looking to enter 15 new countries by the end of the decade, mainly in Africa, as part of its growth strategy”. This naturally made me think of Euromonitor’s latest automotive global briefing, Middle East and Africa: A Region of Contrasting Automotive Opportunities, which reviews the potential for car markets across the region, as well as highlighting the contrasts, exemplified by Nigeria and Saudi Arabia.
However, Porsche’s portfolio clearly appeals to particularly affluent pockets of African society and as Euromonitor has previously identified that the Stuttgart sports car manufacturer’s output has grown in line with the global number of households with annual disposable income over US$250,000, it is instructive to consider where these homes are in the Middle East and Africa both at a national and city level.
An immediately striking revelation from the household incomes data is that there are twice as many homes with annual disposable income over $250,000 in the United Arab Emirates (UAE) than in any other country in the Middle East and Africa for which Euromonitor reports detailed incomes data. Saudi Arabia ranks second, but to put the diversity in income distribution between the two Gulf states into perspective, there are three times as many households with income over just $10,000 in Saudi Arabia than in the UAE. This naturally explains why there are significantly more new car sales overall in Saudi Arabia than in the UAE.
Porsche understandably has direct representation in the top eight Middle East and Africa nations as ranked by Euromonitor (UAE, Saudi Arabia, South Africa, Israel, Egypt, Nigeria, Kuwait and Morocco), excluding Iran. However, notable exceptions from Porsche’s Middle East website are the North African countries of Algeria and Morocco, which both have more homes with annual disposable income over a quarter of a million dollars than Qatar. Similarly, Tunisia and even Kenya now have a greater number of such wealthy households than Jordan. Finally, Cameroon is a country not to be ignored.
Diving deeper into where these households are at a city level, it is little surprise that of the 100+ cities in the region for which Euromonitor holds detailed income distribution data and forecasts, Dubai and Abu Dhabi top the rankings. However, Tel Aviv claiming third place may come as a greater surprise, as well as the fact that there are actually 12 cities with more than 10,000 of these wealthy homes.
At a city level, Porsche already has dealership franchises in all of these cities, except Tehran, but it is noteworthy that it is cities in Algeria, Morocco and Tunisia as well as in Cameroon and Kenya that are projected to enjoy the greatest rates of growth in wealthy households – another reason why Porsche should undoubtedly seek to expand in these countries.
Neil King is head of automotive industry research and analysis at research firm Euromonitor International.