Automotive sales to hit $89m, buoyed by internet growth

Driven by the unprecedented growth in internet and mobile penetration, global automotive sales for 2015 is expected to reach close to $89 million, a 2.4 percent growth from 2014, with an emerging market share rising from 50 percent in 2012 to 60 percent by 2020. The emerging market region’s share of global profits is also expected to grow by 10 percent, according to a Whitepaper on automobile by Carmudi, an online marketplace for cars. The current and future state of the automotive industry in Nigeria and other emerging markets is being propelled by the increase in Internet penetration, rising GDP (Gross Domestic Product), and the emergence of a middle class. Titled ‘The Booming Automotive Industry in Nigeria,’ the Whitepaper also revealed that 83 percent of car buyers in Nigeria, Africa’s most populous nation, conduct research on the internet before making a purchase.

“Globally, auto E-Commerce has grown at such a staggering rate that now as many as 80 percent of new car customers and almost 100 percent of used car customers begin their car shopping experience online. With internet and mobile penetration growing in emerging markets, the rate of moving the car shopping experience online is beginning to mirror that of Western Markets,” said Christian Keller, managing director, Anglophone West Africa at Carmudi, while unveiling the Whitepaper to the media in Lagos recently. The Whitepaper revealed that the Nigeria’s auto industry remains relatively strong, adding that critical policy changes, like the National Automotive Industry Development Plan, have the potential to further deepen the industry. It further added that 30 perform of car dealers in Nigeria reported an increase in car sales over the past twelve months due to the changing economic climate, while 50 percent of the car dealers surveyed reported a decrease.

According to the Whitepaper, majority of Car Dealers said that up to 80 percent of their customers turn to the internet and social media for auto research. The responses also proved that offline media, including newspaper classifieds and auto expos (under 10 percent), are declining as a source for buyers. Nigerian car dealers are also getting more and more digital when advertising their listings. Around 80 percent of car dealers are now primarily focused on advertising their car listings online. William Anumudu, chief executive officer of Globe Motors said, the number of people turning to the internet for car purchases has been on the increase. “A lot of people use the internet to search for information, products or services. Any business that wants to excel must go digital. This is due to the fact that Nigerians like to be associated with new trends, the internet is accessible anywhere and the fact that information is at their fingertips”, he explained.

“Since people are embracing the internet all businesses online will profit”, he said. Nigeria has been heavily dependent on auto imports, which account for the largest share of the nation’s foreign reserves each year. New vehicle assembly plants are expected, and the number of imported cars has already declined significantly – from 11,563 in January to 7,400 units in February. Last month’s historic election of Buhari has generated uncertainty surrounding the sector. Although the party is pro-business, some industry stakeholders disagree with elements of the Autos policy, such as second-hand dealers who will lose out from the 70 percent tax on imports, or who would like to see full implementation of the policy deferred. Buhari could choose to reverse all or some sections of the automotive policy to secure more support with these stakeholders. Keller said “2015 is the year of online car sales in Nigeria. With an unmatched growth rate in online car searches and a rapidly growing middle class, Carmudi´s report affirms that our investments to become the No. 1 online car marketplace in Nigeria were worth it.”

Ben Uzor