Nigeria - AutomobilesNigeria - Automobiles
Overview
Unit: USD thousands
| 2016 | 2017 | 2018 | 2019 (estimated) | |
| Total Market Size | 682,775 | 867,730 | 1,062,200 | 1,320,000 |
| Total Local Production | 300,000 | 350,000 | 200,000 | 200,000 |
| Total Exports | 0 | 0 | 0 | 0 |
| Total Imports | 382,775 | 517,730 | 862,200 | 1,120,000 |
| Imports from the U.S. | 229,665 | 323,581 | 627,055 | 800,000 |
| Exchange Rate: 1 USD | 197 | 359 | 359 | 359 |
Total Market Size = (Total Local Production + Total Imports) – (Total Exports)
Data Sources:
Total Local Production: PWC, Deloitte, NAC, Bloomberg
Total Exports: PWC, Deloitte, NAC, Bloomberg
Total Imports: PWC, Deloitte, NAC, Bloomberg
Imports from U.S.: U.S. Census Bureau
Smuggling, grey imports of second-hand vehicles and the lack of reliable data make the exact size of Nigeria’s vehicle market and fleet size difficult to quantify. Challenges concerning the licensing and identification of vehicles further contribute to this difficulty. The country’s current vehicle size is estimated to be 11.7 million. Due to insufficient domestic vehicle production, Nigeria is highly dependent on imports to meet local demand. For example, in 2018, passenger vehicles constituted the largest export item from the United States to Nigeria according to the U.S. Census Bureau. Auto imports recorded rapid growths between 2004 and 2014 and contracted significantly between 2015-2017 due high import duties on vehicles (70%) linked to the new automotive policy and an economic recession that hit. For example, only less than 7,000 units of brand-new vehicles were imported into Nigeria in 2017 and less than 9,000 units locally produced.
The launch of the Automotive Industry Development Plan (NAIDP) 2014 attracted the interest of leading international carmakers and led
to the resumption of small-scale vehicle assembly in the country. Though the Nigerian Automotive Council has licensed 35 companies to produce cars under the NAIDP, yet the number of locally assembled units remain very low. The government hoped that at least 400,000 new vehicles will roll off assembly lines in 2017 if all the licensed car assemblers produced at full capacity but only less than 9,000 units have so far been built due to huge funding, infrastructure and capacity gaps. Industry contacts believe that the industry at full capacity can only produce a total of 10,000-50,000 units per year. In all, it appears the high import tariff regime aimed to discourage imports and spur local assembly has not achieved this purpose. Car imports (mainly used units) rose significantly in 2018, an indication of an impending threat to assemblers. Although cars and related components are not on the Central Bank’s list of 42 products ineligible for foreign exchange, the difficulty of obtaining foreign exchange has led to increased prices and reduced consumer demand. Corporate organizations, the largest buyers of new vehicles, have reduced or postponed purchases thereby extending the replacement cycle of their fleet from 4 years to 7 years.
Japanese autos dominate the new and used vehicle market, controlling almost one third of it due to customer perception of their reliability. Most of the cars imported from the United States into Nigeria are Japanese brands with Toyota at the top of the chart. Hyundai and Kia have established themselves as increasingly serious competitors to Toyota due to their competitive pricing and improved image in terms of quality. The three Asian brands account for up to half of new vehicle sales in the country. Although there is generally little affinity for American car brands due to consumer poor perception of them, the Ford Explorer is fast gaining patronage due to its aesthetic design and reliability.
Leading Sub-Sectors
The pre-dominance of used cars in Nigeria is expected to drive demand for spare parts. In 2018, the United States exported more than $134 million worth of vehicle parts and accessories to Nigeria according to U.S. Census Bureau figures. Car care products, fuel and oil additives, as well as auto body repair products sell well.
Opportunities
A report by PWC indicates that the growth of companies with products and services supporting auto assembly will improve Nigeria’s chances of becoming an automotive hub and provide more economic activity. Progression from basic SKD assembly to CKD or manufacturing is highly dependent on growth of auxiliary industries and supporting infrastructure such as electricity. Therefore, building the capacity for components such as batteries, belts, lights and tires is key for the success of the auto policy. In addition, there are existing gaps in repair, which will become even more obvious with increased local manufacturing. Plugging this gap will require capacity building, training of skilled labor and adequate supply of spare parts. Other business opportunities which the industry brings include the supply of equipment to domestic assemblers, supply of spare parts and the setting up of local component manufacturing plants. The vehicle distribution system and how vehicles get to the market also need to be restructured and therein lie opportunities for many players.
Web Resources
Nigerian Automotive Council
Price Waterhouse: Africa Africa’s Next Automotive Hub
For more sector information, e-mail: Chamberlain Eke, Commercial Specialist: Chamberlain.Eke@trade.gov
Local Trade Shows
USA FAIR 2020: ACCESS NIGERIA (April 28-30, 2020 - TBC)
Eko Convention Center, Victoria Island, Lagos.
Organized by the US Commercial Service exclusively for American exhibitors to meet thousands of prospective Nigerian businesses.
(Please contact Chamberlain.Eke@trade.gov for more information)
Lagos Motor Fair and Auto Parts Expo
May 6-11, 2019
Federal Palace Hotels, Victoria Island
Lagos, Nigeria