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Nigeria Autos Report Q1 2010
Market |
Automotive and Parts |
Report Type |
Market Research |
Country |
Nigeria |
Published |
18 January 2010 |
Number of Pages |
52 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Nigeria's car imports are forecast to grow by annual average of 8% up to 2013
In November 2009, the director general of Nigeria's National Automotive Council (NAC), Alhaji Aminu Jalal, announced a strategy for the country's automotive industry after it became apparent that the goal of producing a fully indigenous car by 2017 was unachievable. The NAC has now chosen to focus on developing the component sector, in order to produce parts that meet Tier I international standards. We agree that the domestic industry is not in a position to plan the building of a domestic car by 2017. Indeed, the one area where we would expect to see consistent growth over our five-year forecast period is vehicle imports. After an initial decline of around 20% in 2009, we expect annual import growth to average 8% up to 2013.
Dealerships have been hit hard by the credit crunch, seeing demand drop considerably in 2009. Dealers report that price cuts had yet to have a substantial effect as of mid-December 2009. Demand has fallen as Nigerian banks have scaled by asset financing to cover losses, and dealers should not expect a buoyant first quarter in 2009, despite the brightening economic outlook. However, the uncertainty that has hung over the Nigerian autos market since news emerged of Peugeot Automobile of Nigeria (PAN)’s severe difficulties seems to be receding somewhat, after the firm opened a new production line in December 2009. PAN is the country’s only automaker. The line has a production capacity of 22 cars per day, reaching 7,000 units per year. PAN's head of corporate communication, Toyin Akinbogun, hailed it 'a portrayal of total commitment to sustain production by Peugeot Nigeria and foreign stakeholders'.
It is a positive development for PAN, after reports of mass redundancies earlier in the year. Although the carmaker had reiterated its commitment to continued local production, there had been fears regarding its productivity and capacity utilisation. As the country's only major vehicle producer, this has far-reaching implications for the whole industry.
We believe the industry will require significant foreign investment to finance a resurgence in domestic production. The privatisation of most assembly plants means that direct government intervention to support the industry has been removed. At present, however, the business environment is too risky for significant new investment, particularly in the current economic environment. Nigeria ranks last in our Business Environment Ratings for the automotive industry in the Middle East and Africa, with a score of just 33.4 out of a possible 100.
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