As the federal government’s automotive policy takes shape and purchasing power increases, Nigeria is set to become Africa’s next automotive hub, a report by PwC Nigeria has revealed.
The report, which painted three possible growth scenarios, projected average gross domestic product (GDP) growth of 6.6 per cent through to 2020, 5.1 per cent to 2030 and 5.4 per cent to 2050.
In the report, growth in new car sales was assumed to run at twice GDP expansion on the basis of other large emerging markets such as Indonesia.
The report predicted a production of 4.16 million locally manufactured vehicles in 2050, 463,000 new vehicle imports and no second-hand imports (tokunbo).
It also predicted a park of 40.4 million cars in 2050 including 18.3 million Nigerian used.
PwC’s estimates for 2015 have a park of 14.5 million vehicles, tokunbo imports of 335,000, new vehicle imports of 91,000 including the grey cross-border market and just 30,000 locally manufactured cars.
Meanwhile, THISDAY checks revealed that just three companies were assembling vehicles locally, all on a semi knocked down (SKD) basis, although the federal government has awarded 35 licenses.
Additionally, the report identifies required backing in several areas, the first being the cost of vehicle purchases.
The report cited a survey showing that 63 per cent of Nigerians could not afford a car without some support.
The report highlighted porous borders, and noted that cars are the most smuggled items after rice and other foodstuffs.
According to the report, “Quality standards have to be established and enforced if the Nigerian consumer is to be weaned off a preference for imported vehicles. For the same reason, manufacturers would have to invest heavily in training.”
PWC in the report assumed the development of satellite industries to provide parts such as batteries, belts, lights and tyres for vehicle manufacture.
“We would add steel, which is essential to industrialization, and note the FGN’s determination to revive the industry,” said analysts at FBN Quest.
Why decrying low government backing for the industry, FBN Quest stressed that the projected numbers would amount to a transformation of the sector.
“There is a government plan in place (the national automotive industry development plan), which includes a tariff structure to encourage domestic vehicle production. There are major boosts to employment and skills development, as well as balance-of-payments benefits, from the development of a sizeable auto industry.
Among the larger emerging markets, Nigeria is almost alone is not having just an industry. Motor vehicles and assembly represented less than 0.1 per cent of constant price GDP in 2015,” they stated.