Nigeria - Country Commercial Guide
Automotive Sector

This is a best prospect industry sector for this country.  Includes a market overview and trade data.

Last published date: 2021-10-13

Overview

Units: $ millions

                          

2018

2019

2020

2021 (estimated)

Total Local Production

200

220

132

100

Total Exports

0

0

0

0

Total Imports

1,217

1,300

1,365

1,502

Imports from the U.S.

627

667

701

771

Total Market Size

1,417

1,520

1,497

1,602

Exchange Rate: 1 USD

360

360

380

410

Data Sources: 

Total Local Production:   Estimates from local industry contacts

Total Exports:   UN Comtrade

Total Imports:   UN Comtrade

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 difficult to quantify. Challenges concerning the licensing and identification of vehicles further contribute to this difficulty. According to the latest data made available by the National Bureau for Statistics in 2018, there were a total of 11.8 million vehicles in Nigeria. Of this number, 39% (4.6 million) were privately owned, 56% (6.7 million) were commercial vehicles, 1.1% (135,000) were government vehicles, and 0.4% (5,834) were owned by diplomats.

Due to insufficient domestic vehicle production, Nigeria is dependent on imports to meet local demand. In 2020, passenger cars constituted the largest export item from the United States to Nigeria (about $701 million) according to the U.S. Census Bureau. Auto imports grew rapidly between 2004 and 2014 and contracted significantly between 2015 and 2017 due to high import duties on vehicles (70%) linked to the new automotive policy, as well as an economic recession that hit during that period. For example, in 2017, less than 7,000 brand-new vehicles were imported into Nigeria.

The launch of the Automotive Industry Development Plan (NAIDP) in 2014 attracted the interest of leading international carmakers and led to the resumption of small-scale vehicle assembly in the country. According to the National Automotive Design and Development Council (NADDC), there are 31 licensed producers of cars, trucks, and buses currently operating in Nigeria with a combined installed capacity of 205,000 vehicles a year. However, only about seven companies are assembling due to huge funding, infrastructure, and capacity gaps. Due to these challenges, auto makers are now moving to neighboring Ghana and setting up assembly plants there with plans to export the vehicles to Nigeria.

On February 2021, the NADDC in collaboration with the Stallion Group unveiled the first locally made electric car, Hyundai Kona. In February 2021, the director of the National Automotive Design and Development Council stated the goal is that by 2025, 30% of passenger cars driven in the country will be electric powered. Under its new Finance Bill, the GON plans to reduce import duties on imported vehicles from 35% to 5% due to the rising cost of transportation. Industry players and investors have warned that if the bill is passed into law, it could mark the extinction of local manufacturing and significantly affect assemblers who have already invested millions of dollars.

According to Nigeria’s Vice President, the country’s annual vehicle demand is 720,000 units and local production is only able to supply 14,000 units. Therefore, importation (mainly of used cars) have continued to fill the supply shortfall. The NADDC said the country spends about $8 billion each year on imported vehicles. Although automobiles and related components are not on the Central Bank’s list of 45 products ineligible for foreign exchange, the difficulty assemblers face 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 four to seven years.

Japanese brands dominate the new and used vehicle market, controlling almost a third due to their perceived reliability among consumers. The United States has a dominating share of more than 60% of the used vehicles market segment and most of them 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 quality image. The three Asian brands account for up to half of new vehicle sales in Nigeria. Although there is generally little affinity for American car brands due to poor consumer perception of them, the Ford Explorer is fast gaining patronage due to its aesthetic design and reliability.

Leading Sub-Sectors

The growing number of used cars in Nigeria is driving demand for spare parts.  In 2020, the United States exported more than $163 million worth of vehicle parts and accessories to Nigeria, according to U.S. Census Bureau figures.  The United States has a competitive advantage regarding car care products and also accounts for about 40% of used car parts imported to Nigeria, according to industry contacts.

Some of the rail projects intended to connect the country’s commercial cities are still in the works and not fully operational. Therefore, dry and wet cargos have continued to be distributed largely by commercial heavy and light duty trucks. A significant number of the vehicles on Nigerian roads are used units imported from the United States, Germany, Netherlands, and Belgium.

The United States is responsible for nearly half of Nigeria’s import of used trucks and the Mack brand leads as the most preferred due to its perceived ruggedness and durability. Figures from the Census Bureau show the United States exported $190 million worth of trucks and buses to Nigeria in 2020. This represents a remarkable rise from the $82 million and $105 million recorded in 2018 and 2019 respectively.

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 semi-knock down (SKD) assembly to complete knock down (CKD) or manufacturing is highly dependent on growth of auxiliary industries and supporting infrastructure such as electricity. Therefore, building capacity for components such as batteries, belts, lights and tires is key for the success of Nigeria’s auto policy. In addition, there are existing gaps in repair, which will become even more obvious with increased local manufacturing. Mending this gap will require capacity building, training of skilled labor and an adequate supply of spare parts. Other business opportunities that 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 systems for getting vehicles to market also need to be restructured and therein lie opportunities for many players.

Local Trade Shows

Lagos Motor Fair and Auto Parts Expo

Federal Palace Hotels, Victoria Island

Lagos, Nigeria

 

For more sector information, e-mail:   Chamberlain Eke, Commercial Specialist: Chamberlain.Eke@trade.gov