Auto industry presents $2bn import substitution opportunity

The Nigeria’s automotive industry beckons on both foreign and domestic investors to take advantage of the $2 billion opportunity for import substitution by investing in the industry.

The National Automotive Design and Development Council (NADDC) revealed that the $2 billion opportunity is just a fraction of the $6.5 billion automotive import market in Nigeria which could be substituted by investors who establish vehicle assembling or manufacturing plants in the country.

NADDC estimated that up to 2015, Nigeria imported about 400, 000 vehicles valued at $4.2 billion annually, being 100, 000 new vehicles and 300, 000 used vehicles.

Local production capacity has been put at about 300, 000, but utilisation is currently at about 15 per cent of installed capacity.

Even recession could not drastically affect the fortunes of the auto industry as Nigeria imported over 300, 000 vehicles in 2016, being a year the country grappled with recession.

Speaking at a forum with Commercial Attachees of Embassies in Nigeria recently, the Director General of the National Automotive Design and Development Council (NADDC), Engineer Aminu Jalal, said the council had expected the market size of the auto industry to shrink in 2016 because of the recession, but data obtained from the Nigeria Customs Service proved the contrary.

The forum was organised in partnership with the Nigeria Investment Promotion Commission (NIPC) to get the buy in of foreign investors through the various attachees of embassies in Nigeria on Nigerian Automotive Components Investors’ Conference to be held in Lagos in June.

The NADDC’s boss disclosed that a total of 256, 000 vehicles were imported in to the country through the ports and their customs duty paid last year.

He said the number of vehicles imported through the land borders was largely not recorded but when taken into account with the ones imported through the land borders, Nigeria recorded over 300, 000 vehicles import in the year.

The Executive Secretary of the NIPC, Yewande Sadiku, said Nigeria has the biggest auto market in Africa, and the NIPC is poised at attracting both Foreign Direct Investment (FDI) and Domestic Direct Investment (DDI) to the sector.

Sadiku said the NIPC and the Federal Inland Revenue Service are working on developing a compendium of investment incentives to encourage investors to put their money in Nigeria’s economy.