Nigeria Autos Report Q3 2012

In total, 1,475 vehicles were produced in Nigeria in 2011, and while BMI expects this figure to rise to
1,710 by 2014, output will remain restricted if local facilities continue to overlook the potential to source
materials locally. However, the government has lent its support to local suppliers, pointing out the
possibilities for economic growth and employment creation. The government also addressed other areas
of the industry in Q212, for example, The Nigeria Customs Service (NCS) has formulated a strategy to
stop the registration of smuggled vehicles in the country with the help of a centralised database, better
equipped to register vehicle details. In addition, the Department of Petroleum Resources has vowed to
regulate diesel production in the country, following complaints from foreign automakers.
Imports continue to remain the source of the majority of vehicles in Nigeria. In contrast to production
figures, 26,505 vehicles were sold in the country in 2011, and we expect this figure to rise to 32,266 in
2012. In order to encourage the local market, Nigeria’s Customs Service has announced plans to enforce a
uniform duty on imported vehicles from August 2012, which should encourage automakers to assemble
vehicles in Nigeria. Indeed, US carmaker General Motors has expressed an interest in manufacturing
vehicles in Nigeria, and the government has been keen to assure the company that it will promote the
purchase of locally-built vehicles.
Following a slow start to the year, 5,000 new vehicles were delivered to Nigeria in March 2012, an
increase of 86% in comparison to February 2012. However, a large number of imported vehicles are still
second hand, known locally as Tokunbo. The majority of Nigerian car importers prefer to sell Tokunbo
vehicles as they offer greater profit, and this year, around 65% of vehicles shipped to Nigeria are expected
to be second hand. More worrying is the trend of individuals using scrap components to create complete,
if un-roadworthy, cars. This is another area where it is vital for the government to show its face – analysts
have called for the Directorate of Road Transport Services to ensure the quality of vehicles used,
particularly in Nigeria’s built up areas.
A number of encouraging steps were taken by foreign carmakers in Nigeria in Q212. Nissan and Land
Rover respectively launched the Almera sedan and Range Rover Evoque, both of which have been
designed to perform well on Nigeria’s rougher roads. In addition, Peugeot Automobile Nigeria launched
Chinese carmaker Changan’s locally-built Alsvin Sedan in April 2012. PAN expects to build 3,000 units
of the Alsvin in Nigeria in 2012, with capacity to build 7,000 units a year in the longer term. The
production hike will allow Changan to export the Nigerian-built Alsvin throughout West Africa, and
encouragingly, as the project ramps up, PAN says it will create more jobs for Nigerians, while indirect
jobs will become available with related parts manufacturers and authorised dealers.
Finally, luxury German carmaker Porsche’s dealership on Victoria Island commenced operations in
March 2012. The company is likely to face competition from German automaker Mercedes-Benz, but is
confident that Nigeria has the potential to become one of its key markets in Africa, BMI expects annual
Nigeria Autos Report Q3 2012
© Business Monitor International Ltd Page 6
vehicle sales to reach 58,629 units in 2016 – more than double the figure sold in 2011; as such, the
interest taken by foreign automakers in Nigeria is positive, and the industry should be further boosted,
providing the government stands by its pledges to regulate the market and encourage its growth.