Majority of Nigeria’s Used Cars Imported from the US, Reports ITA — According to a recent report by the International Trade Administration (ITA), a whopping 60% of used cars in Nigeria are imported from the United States. Interestingly, these imports are predominantly Japanese brands, which have garnered favor among Nigerian consumers due to their perceived reliability.
Toyota, Hyundai, and Kia are the leading Japanese brands in the country, collectively accounting for almost one-third of Nigeria’s new and used vehicle market. These brands have successfully positioned themselves as viable alternatives to American car brands, offering competitive pricing and a reputation for quality. Indeed, they represent approximately half of all new vehicle sales in Nigeria.
Despite the influx of US-imported vehicles, American car brands struggle to gain traction among Nigerian consumers due to negative perceptions regarding their quality. However, there are signs that some American models are starting to make inroads into the market.
The ITA report highlights Nigeria’s dependence on imported vehicles to meet domestic demand, primarily due to insufficient local production capabilities. In 2021 alone, passenger cars represented the largest export category by dollar value from the United States to Nigeria, exceeding $1 billion as per U.N. Comtrade data.
Since the introduction of the National Automotive Industry Development Plan (NAIDP) in 2014, Nigeria has seen renewed interest from international car manufacturers, leading to the initiation of small-scale vehicle assembly within the country. However, out of the 54 auto assembly licenses issued, only 28 assembly plants commenced operations, with a mere six still operational today. These plants are currently producing at a low capacity, hampered by challenges related to foreign exchange, infrastructure, and capacity.
In response to these challenges, several automakers have relocated to Ghana, establishing assembly plants with the intention of exporting vehicles back to Nigeria. With an annual demand for 720,000 vehicles and a domestic production supply of just 14,000 units, Nigeria continues to rely heavily on imports, predominantly used cars, to bridge the supply gap.
Despite spending an estimated $8 billion annually on vehicle imports, automobiles and related components are not listed among the Central Bank of Nigeria’s (CBN) foreign exchange ineligible products. The difficulties faced by domestic assemblers in obtaining foreign exchange have resulted in price hikes and a subsequent decline in consumer demand. Consequently, many corporate entities, which are the primary purchasers of new vehicles, have either reduced or deferred their purchases, extending their vehicle fleet replacement cycles from four to seven years.
In a collaborative effort with the Stallion Group, the National Automotive Design and Development Council (NADDC) unveiled the country’s first locally-made electric car in February 2021. The NADDC aims to have electric cars constitute 30% of the passenger vehicles on Nigerian roads by 2025.
As of 2018, Nigeria boasted a total of 11.8 million vehicles, with private individuals owning 39% (4.6 million), commercial entities possessing 56% (approximately 6.7 million), government agencies holding 1.1% (about 135,000), and diplomats owning 0.4% (roughly 5,834).
With the majority of used cars in Nigeria imported from the US, Japanese brands are clearly the preferred choice among consumers. As the country grapples with a significant gap between vehicle demand and domestic production, importation remains a crucial element in Nigeria’s automotive landscape. Efforts to boost local assembly and production continue, albeit with challenges, as the nation navigates its way towards a more self-sustaining automotive market.