SUMMARY:Africa is likely to be the next growth frontier in the automotive industry, and automakers are transforming North Africa into the world's newest car-manufacturing cluster. Companies including Volkswagen, Renault, Peugeot, Hyundai and Toyota have invested billions in Africa in recent years. Given the history of political instability in the region, there are risks of doing business in Africa, but local governments are eager to attract foreign investment. Government policies encourage local production rather using imports to serve the growing African market. Adding to their sources of production also allows companies to configure their global supply chains to address trade barriers.

QUESTIONS:

1. Why is Africa becoming an important production base in the automotive industry?
2. How are African governments encouraging foreign direct investment in the automotive industry?
3. What are the advantages and disadvantages for an automobile company that builds a production facility in Africa?