Addis Ababa (CNN)―For a population of 97 million, Ethiopia has just 84,000 vehicles registered last year.

Most of these are imported, but there is an emerging field of foreign companies manufacturing cars inside Ethiopia’s borders.

China’s Lifan Group opened a factory in Addis Ababa in 2014, which has capacity to assemble 20 cars a day. The parts are imported from China, but 97 percent of its employees are local workers.

Producing cars locally allows Lifan to avoid paying the 35 percent import tax that applies to foreign vehicles, and offer consumers a cheaper product. Lifan vehicles are available for $15,000, similar to the price of used imports, which could be a strong competitive advantage.

“Lifan is a new car,” says factory supervisor Figo Wang. “Nissan and Toyota may be second-hand because (they are) too expensive.”

Lifan may also benefit from a wider appetite to see more new cars in operation on the road.

“These old cars pollute the country, and they cost a lot of money to import spare parts,” says Constantinos Berhuetesfa Constantinos, professor of public policy at Addis Ababa University. “New cars…will reduce the transportation problems here.”

Other Chinese manufacturers such as Geely are also basing operations in Ethiopia, and the new field looks set to grow.

“We are very confident to develop in this country,” says Ma Qun, deputy general manager of Lifan Motors Ethiopia. “If we can really make this market very successful, maybe we will bring some suppliers from our headquarters… so we can convince some of them to come to Ethiopia to produce the parts here.”

As Ethiopia’s manufacturing capacity expands, a nation of few cars could see a lot more traffic.

Source: CNN
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