US export accounts for 60% of used cars in Nigeria – ITA

Vehicles exported from the United States of America, account for 60 percent of the used cars in Nigeria, according to a report by the International Trade Administration (ITA).

The report revealed that most of these vehicles are Japanese brands, which dominate the new and used vehicle market in Nigeria, controlling almost a third of the market due to their perceived reliability among Nigerian users.

It said the most acceptable Japanese brands in Nigeria include Toyota, Hyundai and Kia which have established themselves as increasingly serious competitors to Toyota due to their competitive pricing and improved quality image.

These three Asian brands account for approximately half of the new vehicle sales in Nigeria.

Although most Nigerian used cars come from the US, Nigerians have little affinity for American car brands due to poor consumer perception, but some models have begun to break through.

ITA said that due to insufficient domestic vehicle production, Nigeria is heavily dependent on imports to meet local demand such that in 2021, passenger cars constituted the largest export dollar value from the United States to Nigeria (more than $1 billion) according to the U.N. Comtrade figures.

Meanwhile, the launch of the Automotive Industry Development Plan (NAIDP) in 2014 attracted the interest of leading international carmakers and led to the resumption of small-scale vehicle assembly in the country.

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A different report said that 28 assembly plants began operations out of the 54 auto assembly licenses issued, but only six remain operational and are producing at very low capacity due to forex challenges, infrastructure, and capacity gaps.

“Due to these challenges, several automakers moved to nearby Ghana and set up assembly plants there with plans to export the vehicles to Nigeria,” ITA said.

Nigeria’s annual vehicle demand is 720,000 units and local production is only able to supply 14,000 units. Therefore, importation, mainly of used cars, has continued to fill the supply shortfall.

This is why the National Automotive Design and Development Council (NADDC) said the country spends about $8 billion each year on imported vehicles despite the fact that automobiles and related components are not on the Central Bank of Nigeria’s (CBN) list of ineligible products for foreign exchange.

It further stated that the difficulty assemblers face obtaining foreign exchange has led to increased prices and reduced consumer demand.

Also, many corporate organisations, the largest buyers of new vehicles, have reduced or postponed purchases, thereby extending the replacement cycle of their fleet from four to seven years.

In February 2021, the NADDC in collaboration with the Stallion Group, unveiled the first locally made electric car. Then, the director of NADDC said the goal is that by 2025, 30 percent of passenger cars driven in the country will be electric-powered.

According to the latest data made available by the National Bureau for Statistics, (2018), there were a total of 11.8 million vehicles in Nigeria.

Of this number, 39 percent (4.6 million) were privately owned, 56 percent about 6.7 million were commercial vehicles, 1.1 percent about 135,000 were government vehicles, and 0.4 percent about 5,834 were owned by diplomats.