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Nigeria Autos Report Q3 2010
Market |
Automotive and Parts |
Report Type |
Market Research |
Country |
Nigeria |
Published |
7 July 2010 |
Number of Pages |
47 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Nigeria’s automotive market took a huge knock from the global economic crisis, and while it is recovering, the pace is slow. Domestic sales fell to 16,096 in 2009 from 37,377 in 2008 and 84,389 in 2007, according to our figures. We expect sales to creep to 20,968 in 2010 and eventually rise to 42,847 in 2014, although these still represent relatively low figures given the size and potential of the market. Nigeria’s automobile imports in Q110 fell 55% compared with the same period of 2009, reported Reuters primarily owing to reduced consumer spending power. Vehicle imports totaled only 7,893 units in the first three months, a low figure for what is a large and growing economy. Importers expect the outlook to remain bleak for the rest of 2010, despite the renewed growth in the global economy.
Indeed, industry insiders are pessimistic about the immediate outlook, expecting a ‘bleak’ 2010, according to another report by Reuters. Credit has remained relatively tight in Nigeria, despite the economic recovery, making financing harder to come by, particularly for the individual buyers in growing middle classes. Companies, scaling back budgets in the wake of the downturn, are also buying fewer cars. Credit is a major factor in car sales, and accounted for 22% of all purchases in 2008. Despite a central bank freeze on interest rates, financing remains slow as banks look to bolster their balance sheets and take a cautious view, given the problems encountered over recent years.
In response to the downturn, in June 2010, the government recommitted itself to the revival of the auto industry. Vice President Mohammed Namadi Sambo has pledged to create a committee to look into the issues confronting the sector to enable the government to take action to enhance the way that the industry operates. It will consider policy formulation, product competiveness, the implementation of best practice models and tax relief, amongst others tactics.
However, some in the industry are calling for a new raft of limitations on imports intended to support the domestic automotive industry, although we caution that these could end up being counterproductive. Autos firms could be deterred from assembling completely built units (CBUs) and completely knocked down (CKD) kits in the country if they are obliged to purchase components from local partners that they do not feel meet their standards. However, Nigerian industrial leaders and the government may feel that there is sufficient strength in the market to justify regulations that could stimulate growth in the broader autos sector. The size of the regional market is such that Nigeria is in a position of relative strength.
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