Automobile Industry in Nigeria: Potential for Growth (1)

This is a continuation of our series on Nigeria Vision 2020. We have looked at Nigeria’s agribusiness potential. We shall now look at the country’s automobile industry potential. Let us begin with a further quote from the organisers of the Nigeria Automotive Summit 2014, on some key facts:

Nigeria is the 7th most populous country in the world with a fast growing, aspirational middle class (38 million)
In 2012, Nigerians spent USD 3,451 billion on importing new and used vehicles into the country
Nigeria has a potential market of one million plus vehicles a year
Strong potential exists for regional exports into the West and Central African markets
Following the launch of the Nigerian Automotive Industry Development Plan (NAIDP), agreements have been reached with Nissan, Kia and Hyundai to assemble cars in Nigeria
Feasibility studies on establishing assembly plants in various parts of the country are currently being carried out by other automakers.
The organisers of the summit, sponsored notably by the Federal Ministry of Industry, Trade and Investment and the National Automotive Council, also informed that the Federal Executive Council, which is Nigeria’s highest decision making organ, had in October 2013 approved the Nigerian Automotive Industry Development Plan (NAIDP). The NAIDP is a 10 year strategic framework that incorporates measures and incentives that have been designed to revive the nation’s vehicle and auto-parts manufacturing industries. These are focused on five key elements: industrial infrastructure, market developments, standards, investment promotion and skills development. In essence, the Government of Nigeria is fully in support of a vibrant automobile industry. This is of course against the background of the fact that there exist opportunities for joint ventures, industrial infrastructure development, investments, mass vehicle sales, technology development, education and training as the summit organizers also argued.

What are those opportunities for joint ventures, infrastructure, investment, huge vehicle market, technology development, education and training that can and must be leveraged to make the automobile industry in Nigeria viable? Let me begin by saying the goal of Nigeria should be to have vehicle brands that are uniquely Nigerian and ubiquitously acceptable. Toyota sells Japan to the whole wide world. Mercedes Benz markets Germany globally. The Ford is an American global household name. Kia is Korea’s stamp on the global market.

I acknowledge that the current situation especially before the advent of Innoson Motors was exasperating. Based on figures supplied by the Organization International des Constructeurs d’Automobiles and other data from 2014 covering cars, light commercial vehicles, minibuses, trucks, buses and coaches, a Wikipedia report on vehicles manufactured by various countries shows that of the 89,747,430 vehicles produced globally in 2013, the following countries were productive at one level or the other in terms of the number of vehicles they produced internally: China, India, Mexico, Brazil, Spain, Canada, Russia, Thailand, France, United kingdom, Indonesia, Czech Republic, Turkey, Iran, Slovakia, Italy, Argentina, Malaysia, Poland, South Africa, Belgium, Romania, Taiwan, Uzbekistan, Morocco, Hungary, Australia, Portugal, Austria, Sweden, Pakistan, Slovenia, Serbia, Colombia, Philippines, Finland, Vietnam, Kazakhstan, Netherlands. Ukraine. Egypt. Ecuador. Venezuela. Kenya. Bulgaria. Azerbaijan. Tunisia. Zimbabwe. Nigeria, the “Giant of Africa”, was listed as having produced zero number of vehicles that year.

In the same year, 2013, the Wikipedia report, under the caption, “Automotive Industry by Country”, further shows the outstanding automobile producers globally.  It began by stating that United States was the world’s largest automobile producer by volume from the early years of the 20th century until the 1980s, when it was overtaken byJapan. In 2009, China became the world’s largest vehicle producer. The lesson for Nigeria is that though we may be at the bottom now, leadership out-of-the-box progressive and patriotic thinking would take us to the top eventually.

Specifically, in Africa, the report showed that Algeria is the continent’s second biggest automotive market afterSouth Africa and that this North African country can exceed 500,000 vehicle units a year. This potential, the report stated, has attracted several investments like Renault, which holds an estimated 25.5 percent of the national car market and Volkswagen, which is second in the national car market. Other key players include Peugeot, Hyundai,Nissan and Fiat. In 2014 a Partnership between Daimler and the Ministry of Defence for the manufacture of trucks and armored cars was projected to produce 17,000 Mercedes units annually, and they are required to meet international quality standards applied by Mercedes at its plants around the world. The report further stated that the same standards will be applied in both Tiaret, which will produce 10,000 G-Class SUVs and other wagons of average size annually. This at the same time that the production site for engines in Constantine would be producing 26,000 engines. Algeria’s National Industrial Vehicles Company (SNVI) in Rouiba, part of an Algerian-German-Emirati investment, was projected to produce five truck models. Meanwhile, Iran‘s Khodro group  was billed to establish a car assembly plant in Algeria located 300 km from Algiers in October 2015, to produce 30,000 cars per annum. Also planned through an agreement signed between an Algerian company and the Iranian auto making group Saipa is the production of the following vehicle brands: X100, Tiba I and II, Saina and Pride in Algeria by mid-2016. Furthermore, Emin Auto, an Algerian-Turkish society, including representatives of several Chinese vehicle brands, were billed to sign an agreement for a project to build an assembly line of commercial vehicles in Ain Temouchent still in Algeria. The project is in partnership with the Chinese Jianghuaa Automobile Corporation (JAC) Motors and Emin Auto. This project will be located in the new industrial zone Tamazoura (54 km from Ain Temouchent) over an area of 34 hectares. This assembly unit will generate hundreds of jobs. The plant is expected to produce 10,000 trucks a year, a volume that is planned to be raised, in the tenth year to 100,000 vehicles a year.

We shall continue this article in the next edition of this column.

Alabi Wuya can be reached via:  @alabiwuya