Nigeria Outlook 2017. Economic recession will push market down

Nigeria Automotive Industry Car of the future

Nigeria Automotive Industry outlook in short-term is still negative while a recovery is expected from 2018 up to the 2022, when sales are projected at 67.000 units. The market just fell down hit by economic recession

Today

The 2014 NAIDP introduction failed completely any target. Indeed, more than the new policy, the fall of oil price in the international market has killed the economic development of the country with 2015 GDP in recession and a forecast for a near flat 2016 figure, in presence of still high (over 8%) inflation with real purchase power dropped down from the already low-level of same more than US$ 2.500 pro capita per year.

In the 2015 the domestic market reported a sharp decline and the 2016 is still declining with no signs of recovery.

NAIDP aims to create barrier to the import of pre-owned vehicles in favor of local made new products but despite increased duties, the circulating fleet is still growing thanks to the import of used cars.

Several car makers had been attracted by the government (and their global consulting firms, “sellers” of really optimistic future) and it seems that over 27 licenses agreement had been signed between the Minister of Infrastructures and Transportation and international firms, frequently joined with local distributors.

According to the National Automotive Design and Development Council, Ford, Honda, Hyundai, Kia, Nissan, Peugeot and Volkswagen cars and SUV, Shacman and Man Trucks, and Ashok-Leyland buses have now local facilities to assembly, but we got evidence of less

In August 2015, the Nigerian government awarded licenses for 12 new vehicle assembly plants to manufacturers, and a lot of them are Chinese. They include Toyota (Century Autos), Renault (Dana Motors), Joylong, Dongfeng (Coscharis Auto), FAW (Perfection Motors), Tata, Higer (Globe Motors) and Sinotruk.

In the 2016 several other agreements have been signed towards the impressive Government’ target to reach 45 local production sites. Indeed, just three plants are actually producing and no any new plant has been opened since 2014 “revolution”.

Future Outlook

The actual economic crisis is coming over but the GDP growth will be slow in the 2017 and the inflation high. The population growth index is rapidly falling due to net emigration trend and could be negative in few years. The development of infrastructures will be strong, but inadequate to a country with near 200 million people.

In the just released Nigeria Autos Research 2005-2022, our research team forecast a total domestic new vehicles market at 67.000 units in the 2022 a volume near the double from last year, but well below expectations of local observers.

You could compare our current forecast with those released by Pwc in the 2014, when they were expecting a real boom for this market with new vehicles sales projected at 200.000 units by the 2020.

The circulating fleet will keep to be fueled by pre owned vehicles imported while the vehicle density in the 2020 will be 23 vehicles for each 1.000 inhabitants, up 3 points from 2015.

We do not believe Nigeria is becoming the next hub for Central Africa, considering the competition from production opportunities available in Morocco, Kenya, Angola, South Africa. The only option for a real development should be the introduction on strong incentives for local production but the current economic outlook and political approach do not suggest viable actions in this direction.

Research, Consulting, Data & Forecast Store

F2M covers intensively this market with several products developed to help any investigation required.

Market Researches in PDF are immediately available for download with study on the market since 2005 and with forecast up to the 2022.

Auto Data in EXCEL are immediately downloadable with annual sales volume, split by month, for all brands and all models distributed in the market. This year data are released year to date, but you will receive a monthly update until the year-end.

All these and more within our Nigeria Corner Store.

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