Ford to Expand in Middle East & Africa

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DUBAI, United Arab Emirates – Fox Business reports that Ford Motor Company, which designs and manufactures cars and trucks, is planning to accelerate its growth in the Middle East and Africa over the next 24 months. Currently, the company sells about 25 different models of Ford and Lincoln vehicles in the Middle East and about 12 different models in South Africa. Combined sales in both regions total approximately 200,000, and Ford plans to increase that number substantially over the next few years. According to Stephen Odell, president of Ford of Europe, Middle East and Africa, “[t]he Middle East and Africa is poised to become one of the next big automotive growth markets and we want to be there for these customers with great new cars and trucks.”

Ford’s expansion plans will consist of a global business unit for the company’s new Middle East and Africa operation. The operation will be headquartered in Dubai, and Ford predicts that the move will help raise annual sales in the region to 5.5 million units by 2020, nearly a 40 percent increase from the 3.9 million units currently sold per year. The operation will also consist of two sub-operations – South Africa and Sub-Saharan Africa, and the Middle East and North Africa.

This move indicates that there is a significant increase in demand for automobiles in the Middle East and Africa. When there is an increase in demand for consumer goods, it is very likely that there is a corresponding increase in the number of people who are entering, or on the cusp of entering, the middle class. Although some Middle Eastern countries such as Saudi Arabia have relatively low poverty rates, there are still many countries in the region with high poverty rates. The same is true of Africa.

Egypt, Ethiopia, Iraq, Pakistan and South Africa are countries located in either the Middle East or Africa with poverty rates between 20 and 30 percent, according to World Bank. Afghanistan, Chad, Libya, Somalia, Sudan and Yemen constitute the regions’ countries with poverty rates of 30 percent or more, with rates in Chad estimated as high as 46.7 percent. Given these alarmingly high poverty rates, Ford’s expansion is a potential indicator of positive economic growth and poverty reduction in the Middle Eastern and African regions as a whole.

It can be expected that as Ford’s operation progresses, more information will be available with respect to the expansion and how it relates to the poverty rates of particular Middle Eastern and African countries. Despite the current lack of specificity regarding exactly which Middle Eastern and African countries will be affected by the expansion, Ford’s willingness to expand into a region known to have higher-than-average poverty rates should serve as a reminder of how important business is to lifting people out of poverty and into the middle class.

– Cavarrio Carter

Sources: Bloomberg, World Bank, Fox Business, Arab News
Photo: All Ford Mustangs

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