Nigeria’s $210m auto industry overshadowed by Morocco, South Africa, and Egypt.
Nigeria’s $210 million automotive industry lags behind peers like Morocco, South Africa, and Egypt due to low demand for locally-made vehicles and heavy reliance on imported second-hand cars.
In 2023, Nigeria produced around 2,034 vehicles worth $210 million, contributing only 0.04% to its GDP. In contrast, Morocco’s industry produced 535,825 vehicles valued at $31.4 billion, accounting for 24% of its GDP. South Africa, the continent’s second-largest automotive producer, made 633,337 vehicles worth $20 billion, contributing 5.3% to its GDP. Egypt produced 23,754 cars valued at $1.5 billion, contributing 0.31% to its GDP.
Nigeria’s vehicle assembly plants, including prominent names like Nissan Motors, Honda Motors, and Innoson Vehicle Manufacturing Company, have a combined capacity of 500,000 vehicles per year but operate at about 2% of this capacity. This underperformance is attributed to low patronage and competition from imported used cars.
In contrast, Morocco’s industry benefits from substantial government support, including subsidies for manufacturers, improved infrastructure, and skilled workforce training. This support has attracted significant investments from companies like Renault and Stellantis. Similarly, South Africa’s Motor Industry Development Programme (MIDP) and Automotive Production and Development Programme (APDP) have fostered a robust automotive sector with companies like BMW and Toyota.
In Nigeria, the demand for new cars is stifled by high-interest rates on auto financing and the preference for cheaper, imported used vehicles. Takashi Nakajima, managing director of Honda Automobile West Africa (HAWA), highlighted the need for government intervention to restrict used car imports and support auto financing to boost local demand.
Despite a combined investment of over N500 billion in Nigeria’s automotive sector, the local industry remains underutilized. Remi Adams of HAWA noted that their plant, with a capacity of 10,000 units per year, currently produces about 2,000 units due to low demand.
The National Bureau of Statistics reported a significant increase in passenger car imports into Nigeria, which jumped to N1.47 trillion, a 224.67% increase from 2022. This trend undermines local manufacturing efforts.
Joseph Osanipin, director-general of the National Automotive Design and Development Council (NADDC), emphasized the need for Nigerians to support locally-made vehicles to boost the industry’s contribution to the GDP and job creation. Benneth Ejindu of the Nigerian Automotive Manufacturers Association (NAMA) stressed the potential for local production of automotive parts and called for the signing of the NAIDP 2024 into law to promote domestic manufacturing.
Former government adviser Luqman Mamudu suggested that all imported used vehicles should have certificates of integrity from their countries of origin and called for a N100 billion intervention fund for vehicle acquisition loans for made-in-Nigeria cars. This, he argued, would help reduce transportation costs and drive down inflation by promoting shared car services, buses, and trucks.
The Nigerian automotive industry has the potential for significant growth if supported by favorable policies, investment in local manufacturing, and a shift in consumer preferences towards locally-made vehicles.
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