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Local Vehicle Assemblers Struggle Amid $1 Billion Investment, Lament Low Demand




Nigeria’s auto industry has continued to struggle due to low demand and the influx of used cars, despite a $1bn investment.

Despite investing about $1bn under ex-President Goodluck Jonathan to revamp the industry, the Nigerian automobile industry continues to underperform despite having the largest market in Africa.

The penchant for new foreign vehicles and imported used cars has caused local carmakers to continue battling with local patronage. The high cost of production in the country has made locally manufactured or assembled cars out of the reach of many mid-low income earners. They have to opt for foreign-used ones, which are more affordable. High-income earners, on the other hand, prefer to go for imported cars.

Recently, there was an outcry from Nigerians when the 469 members of the National Assembly spent N58bn on imported sport utility vehicles.

According to industry data, the overall demand for vehicles in Nigeria is about 400,000 units, the demand for new made-in-Nigeria vehicles is only about 2.5 per cent of this figure, and about 75 per cent of this is attributable to the imported used cars market.

The National Bureau of Statistics Foreign Trade in Goods report shows that import bills on used vehicles increased quarter-on-quarter by 956 per cent to N733.9bn in the second quarter of 2023 from N69.49bn in the first quarter.

In 2014, the National Automotive Design and Development Council, the industry regulator, issued licenses to over 40 firms to set up vehicle assembly plants with a view to making Nigeria an automotive hub.

Under the 2014 National Automotive Industry Development Plan, former President Jonathan introduced vehicle import tariffs of 70 per cent to discourage import, and digital solutions to check smuggling.

Vehicle smuggling is one of the most smuggled gods in the country, which has made it difficult to track the exact figures for imported vehicles.

However, that automobile initiative has been updated to a 10-year NAIDP, which spans from 2023 to 2033. One of the major objectives of the plan is to boost local vehicle production to 200,000 units within the period.

Achieving a production target of 200,000 units by 2033 will require significant investment, estimated in the range of $6.3bn-$15.8bn across the industry value chain, the Federal Government stated in the plan.

As of March 2023, the total number of licensed automobile manufacturers/assemblers in Nigeria was 37, according to a note by the Director for Policy and Planning, NADDC, Musa Sani. The note titled “Updated List of the Accredited Locally Manufactured Brand in Nigeria” was obtained by The PUNCH. The document also specified the installed capacity, product, and brand name of the auto companies.

PAN Nigeria Limited, Milkano International, and VON Automobile Nigeria are the top three companies with installed capacities of 25,000, 46,000, and 39,000, respectively.

The industry regulator stated in the 10-year NAIDP that various auto assemblers in Nigeria had so far invested over $1bn in the industry.

Revenue generated

The country’s automotive manufacturing industry raked in $400m in 2022 (N302bn), according to MarketResearch.

The NAIDP 2023 report stated that the country’s automotive sector is the 3rd largest in Africa. However, going by its 2021 output of 10,400 units, the local industry accounted for less than one per cent of the total production in Africa.

The report noted, “In comparison, Nigeria’s domestic demand has maintained a historical growth rate of about 2.3 per cent over the last 10 years and is estimated to grow to about 503,000 units by 2032.

The exact number of auto manufacturers operating in the country at full capacity remains unclear. Experts said Nigeria’s auto companies were largely involved in assembling rather than manufacturing.

The Chief Executive Officer of Saglev, Sam Faleye, said at a press conference recently that it had secured regulatory approval from NADDC to set up an auto assembly plant.

Licensed automaker, Lanre Shittu Motors, also announced plans to introduce electric and CNG vehicles assembled at its plant in Ogun State before the end of 2023.

The President of the Automobiles and Road Safety Initiative, Samuel Oriowo told The PUNCH, “When we talk about making cars, it is important that we create them from scratch using materials like steel and engines. This means building complete vehicles herein.

“However, nowadays, most of the cars are only assembled here. The major parts are made in other countries, and we just add small things like doors and headlights. This makes it less meaningful for our local industry.”

The Vice President of Automobiles and Road Safety Initiative, Eduwaye Henry, acknowledged that the initiative by former Nigeria’s President to give licenses to auto operators had shown some results, such as Innoson Motors operating in Nnewi, Anambra.

He noted, “There were plans to restart Peugeot in Kaduna, but the current status is uncertain.”

High cost

Industry insiders say Nigerian assembled cars were unaffordable, “they are more expensive than imported cars, which are largely used cars.”


The Chairman of Automedics Motor
International, Yusuf Adah, confirmed to The PUNCH, “Several automobile companies in the industry, including mine, are licensed to manufacture cars and other vehicles in Nigeria. For instance, Innoson vehicles are designed and produced with the Innoson trademark in China and then assembled in Nnewi, Nigeria.

“To be frank, we don’t have a proper vehicle manufacturing company in Nigeria right now. What we have can be better described as assembly plants.

Meanwhile, Adah revealed that the main problem was that “We lack the necessary technological support systems. Assembling vehicles in Nigeria is even more expensive than importing fully-built cars from America and China.”

The industry regulators had attributed the challenges confronting the industry to heightened volatility and consumer pressure due to high inflation and exchange rates. It noted because of that manufacturers were grappling with increased production costs and significant reductions in profit margins, as they were compelled to source from parallel markets at considerably higher rates.

Government support

According to automotive experts, the government has a critical role to play in fostering the growth of the country’s auto industry. They stressed the need for the government to make a concerted effort to bolster local assemblers by prioritising the purchase of made-in-Nigeria vehicles.

The Chief Executive Officer of Nord Motors, Ajayi Oluwatobi, argued that increased governmental support for local assemblers would not only stimulate economic activity within the country but also fortify the local automotive sector against external influences.

“The government should initiate interest in these vehicles. The revenue and the support from the government will be leverage for local manufacturers to grow.

“We believe that the government can support the growth of the second-hand market by mandating the purchase of locally made vehicles by civil servants. This approach proved successful in the past, such as the closure policy, where the government made it mandatory for officials to drive vehicles made in Nigeria.

“Currently, our vehicles, notably our flagship model, are of excellent quality, consistently winning bids in various competitions. By encouraging government officials to adopt these vehicles, a flourishing second-hand market could emerge within four years.

“As people recognise the durability and quality of our products, the second-hand market would likely expand, leading to long-term market dominance. This is a gradual process that requires strategic steps, starting with government support and local production,” he said.

Despite the outcry that greeted the procurement of imported vehicles for lawmakers, they had justified it. The spokesperson of the House of Representatives, Akin Rotimi, in a statement, said that the purchase of vehicles for legislators was in accordance with extant procurement laws, and had been the practice in previous Assemblies.

Reacting to this development, Oluwatobi said, “We have a capacity of over 9,000 units a year. So, that is about close to 1,000 a month. So, we can easily make those vehicles in one month if we get the notification in advance.

He stressed the need for government officials and political officeholders to buy Nigerian-made vehicles, which according to him, are of the same standard as the ones being imported.

“We import the vehicle components from where the biggest brands in the world buy from. I buy from the best Original Manufacturer Equipment. It is the same.

“Again, and I just really think that going forward, they will understand the importance of showing people that you also support your own country and you believe in your country.”

The Head of Corporate Communications and Affairs at Innoson Group, Cornel Osigwe, in an interview, expressed deep concern over the current government trend of favouring foreign vehicles over domestically manufactured ones.

Osigwe emphasised that while various government agencies, including the military, police, and state governments are ostensibly supporting initiatives to patronise Nigerian-made vehicles, there was a pressing need for a more robust and effective implementation of the public procurement policy.

He stated, “Last week, there was misinformation about the absence of a vehicle manufacturing plant in Nigeria, but we have invited individuals to witness our progress.”

He underscored the global competitiveness of Nigeria’s automotive industry, urging other countries to recognise and patronise Nigerian-made vehicles.

Drawing parallels with developing economies like India, Osigwe noted the significant annual vehicle production capacity, highlighting the imperative for Nigeria to focus on its automobile industry for sustained economic growth.

He pointed out that the current disparity in vehicle production, with less than 20,000 made-in-Nigeria vehicles sold annually, was indicative of a significant dependence on foreign vehicles.

He stressed that prioritising and supporting local vehicle manufacturing would not only stimulate economic growth but also have positive cascading effects on associated industries.

Osigwe urged the government to thoroughly consider the extensive benefits of patronising locally made vehicles and called for strategic investments to promote and subsidise the Nigerian automobile industry.


Woman killed while crossing road in Anambra




The Federal Road Safety Corps (FRSC), Anambra State Sector Command, has confirmed the death of a woman in an accident at Okpoko Market on the Asaba-Onitsha Road.

The Sector Commander, Mr Adeoye Irelewuyi, who confirmed the accident to journalists in Awka on Thursday, said that the woman was hit while she was crossing the road.

He said that the accident, which occurred on Wednesday, involved a commercial tow truck with registration number XA550BMA.

“Eyewitness report reaching us indicates that the truck was towing a vehicle in an uncontrollable speed along the axis.


“The vehicle that was being towed got detached from the tow truck.

“It hit and killed a female adult, who was said to be crossing the road, while the tow truck continued its movement.

“FRSC rescue team came to the scene and took the woman to Toronto Hospital, Onitsha, where she was confirmed dead and her body deposited at the hospital’s mortuary,” he said.

While sympathising with the family of the dead, the sector commander urged motorists, especially tow truck drivers, to exercise a high level of professionalism.

He also urged the drivers to always use standard equipment and avoid speeding.

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LASG’s maize palliative impactful, says poultry association chair





The Chairman, Poultry Association of Nigeria (PAN), Lagos State Chapter, Mr Mojeed Iyiola, said the state government’s maize palliative to members of the association made a positive impact on the sector.

Iyiola said this in an interview with the News Agency of Nigeria (NAN) on Thursday in Lagos.

“We received about 150,000 tons of maize in February from the Lagos State government as palliative to cushion the effect of high feed prices.

“The major benefit of the palliative is that it actually cushioned the cost of production for most poultry farmers in the state.

“The palliative was beneficial as it made the cost of some poultry produce, especially eggs to drop,” Iyiola said.

He noted that prior to the palliative, a crate of egg was sold between N3,500 and N3,700 at the farm gate, but after the palliative, it now sells between N3,200 and N3,400.

According to the PAN chair, retailers and middlemen who sell from N3,800 to N4,200 do that for their personal gain.


“We have urged our members to sell their eggs at reasonable prices following the receipt of the palliative from the government.

“We appreciate the Lagos State government for the palliative but we also urge the federal government to do likewise, to further reduce the cost of production in the sector.

“This will consequently lead to drop in the prices of all poultry produce across board,” he said.

He said the palliative was shared among financial members of the association at no extra cost.

“As an association we shared the grains equally across PAN’s eight zones in the state equally. We also mandated each zone not the sell even a grain of the maize.

“We, however, considered new poultry farmers who wanted to the join the association as beneficiaries of the palliative,” said Iyiola.

He noted that through the palliative, more poultry farmers were recruited into the association.

“The maize was shared only to poultry farmers and not feed millers, it is the major component of poultry feed formulation,” he said.

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