A report by the Deloitte Africa’s Automotive Insights has revealed that local production of vehicles in Nigeria dropped in 2015.
The study said production dropped from 4,000 units in 2014 to 2, 500 units in 2015, adding that it further dropped to 2000 units in 2017.
This came despite the efforts of the Federal Government to encourage local automobile production through the launch of the Nigeria Automotive Industry Development Plan (NAIDP) in 2014 and the subsequent hike in import tariffs for vehicles, which has attracted the interest of leading international automakers and has led to the resumption of small-scale vehicle assembly plants in the country.
“In 2015, local assembly was only able to cover 10-15 per cent of the new vehicle market,” the study said. “Representatives from the Lagos Chamber of Commerce and Industry put the total number of locally assembled vehicles at approximately 2,000 units for 2017.
“A leading commercial vehicle assembler cautioned that even these figures of locally assembled vehicles are likely to be overstated. A number of assemblers either only assemble a very limited number of ‘test vehicles’, or overstate the degree of value added in the assembling process in order to gain access to benefits under the NAIDP, highlighting the need for clear measures that ensure adequate implementation of the policy.
According to a senior representative of one of the automotive companies present in Nigeria, approximately 1 000 passenger vehicles were assembled in Nigeria in 2017 – an even more conservative estimate.
Currently, 35 companies are licensed to produce by the Nigerian Automotive Design and Development Council (NADDC) under the NAIDP. Despite the increased focus on the automotive industry, the sector’s contribution to Nigeria’s Gross Domestic Product (GDP) remains low at 0.07 per cent in Q2 2015.
“At present, the vehicles are assembled from imported SKD kits with a limited degree of local inputs-sourcing due to the lack of a reliable and adequate domestic supplier base, the report further said.
“While current assembly figures are low, with Peugeot Automobile Nigeria recording the largest number of vehicles assembled in 2015 with 400 units, the automotive companies aim at increasing their annual output in order to capitalise on the long-term growth prospects of the Nigerian market.
“However, due to the current economic slowdown, expansion plans are likely to be delayed as reflected in the decline of employment levels in some of the assembly facilities.”
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