The origin of the Nigerian Automotive industry can be traced to the early 1960's when private companies such as SCOA, Leventis, and UAC took the lead to establish Auto Assembly Plants using Completely Knocked Down and Semi-Knocked Down Parts. The government, in the 1970's joined the industry which led to the establishment of Peugeot Nigeria Ltd. (PAN), Kaduna, Volkswagen of Nigeria Ltd. (VWON) Lagos, Anambra Motor Manufacturing Company (ANAMMCO), Enugu, Styer Nigeria Ltd., Bauchi, National Truck Manufacturers (NTM), Kano, and Leyland Nigeria Ltd., Ibadan. For various reasons, these automotive plants closed down between 1980 and late1990's.
As a result, the country has predominantly been a major importer of used and new cars. According to the Nigerian Automotive Manufacturers Association (NAMA), in 2012, the country imported 300,000 used vehicles, and 100,000 new vehicles valued at $3.4 billion. However, this import dependency is about to change with the introduction of a new automotive policy which was announced in October 2013. The new automotive policy includes the imposition of 70 per cent duty on imported used cars. Consequently, Nigeria aims to discourage importation of vehicle, in order to encourage the purchase of locally made Nigerian vehicles, while exporting to other neighbouring African countries. This new policy is expected to create 70,000 direct jobs, and 210,000 indirect jobs.
In line with this development, Nissan motors through its Nigerian representative (Stallion Group
), took the lead to unveil its new line of locally manufactured cars at an old Lagos Volkswagen Assembly plant. The company fulfilled its promise at the end of April 2014, by rolling out the new Nissan Patrol, and also plans to roll out Almera and NP300 this month.
Other automotive companies have also shown interest in the Nigerian market. Indian companies such as TATA Motors and TVS motors have already concluded their plans to establish their plants in the country. Kia Motors has also signed an agreement with Dana Motors Limited to establish a vehicle assembly plant. Another collaboration is also expected between Toyota and its Nigerian representative (Elizade Motors). Toyota currently holds 50 per cent market share in Nigerian automotive market. However, it is argued that Toyota may loose its market share, based on the lead start initiated by Nissan Motors.
Investors in the Nigerian automotive industry are confident that the population of the country will be a potential for the success of their business. This population size, has been a major attraction for these international vehicle manufacturers to deploy a market entry strategy into the Nigerian market.
This initiative by the Nigerian government is indeed a welcomed development. However, for this policy to be effective, there is need to ensure that the president fulfils his promise to provide basic infrastructures such as roads, power and port facilities. In line with this, the government has adopted a Public-Private partnership model and encourages the private sector to collaborate in infrastructural development.
In addition to infrastructure, it is important to critically analyse the reasons for the failure of the 1970 automotive policy, so as to ensure that this is not another policy of the government that will be swept under the carpet.
No doubt, the automotive industry in other parts of the world has played a significant role in Job creation and even reviving the economy during global recession. It is therefore expected that this policy will help in improving the Nigerian economy, create wealth, and employment in the country. At the same time, provide investors with a good and sustainable return on their investments.