Ade-Ojo: Nigeria’s Auto Industry Expected to Grow by 5% in 2018

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Bennett Oghifo

The nation’s auto industry is expected to grow by about five per cent next year after the market closed with a drop of 48 per cent in sale of brand new vehicles in the third quarter of this year, from about 14,500 units in 2016 to about 7,000 units at the end of the third quarter of this year.

The Managing Director of Toyota Nigeria Limited (TNL), Mr. Kunle Ade-Ojo, gave these figures at the company’s quarterly review of the nation’s auto market, held at its headquarters in Lagos at the weekend.
According to Ade-Ojo, “We are forecasting that the auto market will grow 5 per cent. I say this because of the easing that we are beginning to see. If you look at the ratio sales of vehicles; most sales were more of commercial vehicles than of passenger vehicles.

“In 2018, we hope to see a bit of balancing with the recovery of passenger vehicles. This year, a lot of companies were very careful because of the economic recession. They buy vehicles that would help improve productivity of their businesses. As the economy improves, so will there be balancing of sales across the models and vehicle segments. A more realistic growth will be experienced next year. However, there are risks. As 2018 budget is signed into law, we might begin to see some marginal activities in businesses. We are hoping that there will be an improvement generally.”

He stated that “from the importation point of view, there is a slight improvement because in first quarter (of 2017), we had about 90 per cent drop but as at the third quarter now, the drop has reduced to 62 per cent.
“We imported about 2,300 as at Q3 ending (of 2017) and 6,100 as at Q3 of 2016. We had a drop of 62 per cent in the import.”

Ade-Ojo also presented his company’s outlook in the period under review, saying, “As at the end of third quarter (of 2017), our market share was about 22 per cent of the brand new vehicles sales (in the country) but we are hoping to bring it to about 24 per cent at the end of the year. We are however, forecasting to end it at about 9,000 units of vehicles.”

The number one selling model for Toyota, he said was the Hilux, which contributes about 60 to 70 per cent of sales, explaining that TNL sold about 1,200 Hilux out of about 1,900 vehicle sales.

He said the Avensis and Hiace came next but that the Hiace did not do well as it used to because transporters now retained their vehicles for longer periods on account of the poor economy that prevents regular fleet change.
He said: “What we noticed this year was that as a result of the state of the economy and the cost of acquiring these vehicles, transporters are beginning to use the vehicles they have for much longer and what they are doing also is to invest more in after sales service.

“One of the things we tried to do with some of these transporters is to work with them in terms of how to manage their fleet much better; the maintenance of the fleet so that they can use it for much longer.

“However, we are beginning to see changes and most of the changes would come up next year. As we move towards the end of the year, we have demand for Hiace and there are some indications during the year which shows that there is improvement in the purchases of Hiace and we are forecasting that between now and next year, the product would be much more available.”

Presenting the ratio of the vehicle sales, he said most of the sales were more of commercial vehicles compared to sale of passenger cars, but that “by next year, we hope to see a bit of recovery in the passenger vehicle segment whereby we would see a balancing in the ratio of commercial to passenger sale.”
Ade-Ojo said, “Next year, the Hilux would not be contributing the high level it did this year.”