BMI's Executive Summary

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Nigeria's recently privatised automotive industry is at a crossroads, with the potential for considerable growth limited by an unfriendly business environment and lack of proactive government support for the objectives set down by the National Automotive Council (NAC), according to BMI's latest Nigeria Automotives Report.

Most of Nigeria's six vehicle assembly lines operate well below capacity, although some are wellequipped. Throughout 2006 and 2007, the federal government and some state governments reduced their ownership of the automotive industry. However, with a relatively small and volatile domestic market and enduring problems of corruption and political instability, foreign partners have largely lost interest in Nigeria. Consequently, the new core investors are locally-owned firms, which lack the expertise and capital to revive the sector.

The NAC has established the Automotive Development Fund (ADF) to award loans at low interest rates and favourable repayment terms. In October 2007, the NAC announced that it disbursed a total of NGN5.27bn (US$44.5mn) under the ADF to motor companies between 2004 and September 2007. BMI believes the sums disbursed are too small and mostly not directed towards the assembly and manufacturing sector and therefore are unlikely to make a significant impact on the automotive industry. The Nigerian government is coming under increasing pressure to protect domestic car manufacturers from imported new vehicles. The new owners of Peugeot Automotive Nigeria (PAN) and National Trucks Manufacturers have complained that the government's preference for imported vehicles as one of the major factors in the industry's struggle to survive. As the federal government, state governments and oil companies make up a large bulk of Nigerian automotive purchases, their purchasing policies have a significant impact on the local manufacturing sector.

BMI estimates that automotive sales rose 15% y-o-y in 2007 to 84,398 units on the back of strong economic growth, the appreciation of the naira, public sector purchases and the government's car loan programme for civil servants and members of the armed forces. Fuel shortages and the rising cost of living were the main limiting factors in the automotive market. In the medium-term, public sector spending on car fleets and public transportation is likely to be a key determinant of the automotive sector. With NGN94.36bn (US$800mn) allocated to transportation in the 2008 budget, the automotive market is likely to be buoyant over the next two years with BMI forecasting a peak in the market in 2010, when total sales will amount to around 95,700 units.

By 2010, total automotive sales will be up 13.4% over 2007 levels, with car sales up 11.9% and commercial vehicle sales (including buses) up 22.5%. However, with economic growth dipping below 4.0% in 2011 and 2012, the government is likely to consolidate spending by cutting its transportation capital budget and the car loan programme coming to an end, the automotive market will contract, with total sales falling to around the 2007 level.

Contents

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Chapter 1 – SWOT Analysis

Nigeria Auto Industry SWOT

Chapter 2 – Middle East and Africa Overview

Table: Middle East And Africa Autos Production – Historical Data & Forecasts (CBUs unless otherwise stated)

Table: Middle East And Africa Autos Sales – Historical Data & Forecasts (CBUs unless otherwise stated)

Suppliers

Table: Africa Autos Sales 2005 By Segment

Table: Middle East Autos Sales 2005 By Segment

Chapter 3 – Business Environment Rankings

Economics – Long-Term Risk

Politics – Long-Term Risk

CBU Output Growth

Vehicle Ownership/Penetration Potential

Regulation

Competitive Environment

Chapter 4 – Industry Forecast Scenario

Production and Sales

Table: Nigeria Automobile Sector – Historic Data & Forecasts (US$mn unless otherwise specified)

Trade

Table: Nigeria Automobile Sector – Historical Data & Forecasts (US$mn unless otherwise specified)

Chapter 5 – Macroeconomic Forecast Scenario

Table: Nigeria - Macroeconomic Forecasts

Country Snapshot: Nigeria Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Consumption And Stratification

Chapter 6 – Special Focus: Commercial Vehicles

Regional Market Overview

Table: Regional Commercial Vehicle Market: Country Ranking, Sales

Table: Regional Commercial Vehicle Market: Country Ranking, Production

Table: Regional Commercial Vehicle Market: Company Ranking Of Significant Regional Manufacturers

Table: Recent And Planned Investments In The Middle East And Africa

Nigeria Commercial Vehicles Sector

Table: Nigeria Commercial Vehicle Sector – Historic Data & Forecasts

Table: Nigeria Commercial Vehicle Sector – Historic Data & Forecasts

Chapter 7 – Competitive Landscape

Table: Nigerian Vehicle Manufacturers Scheduled For Privatisation

Chapter 8 – Company Monitor

Regional Case Study: Ford

Sales

Table: Ford Dealers In Middle East And Africa

Production

Table: Ford Assembly Plants In The Middle East And Africa

Company Profiles

Peugeot Automobile Nigeria (PAN)

Toyota Nigeria

BMI Forecast Modelling

Automobile Industry

Sources

Appendix: Regional Demographic Data

Table: The Long View: Data Over The Economic Cycle (2000-2007)

Table: Population

Table: Household Spending Per Capita, US$

Table: Private Consumption Per Capita, US$ PPP

Table: Market Size, GDP, US$bn

Competitive Landscape for Middle Eastern Automotives: Sample of  
Companies Ranked

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Rankings and Competitive Landscapes by production and sales; market share and change on previous year; number of employees, ownership structure and year established. Also includes analysis of company expansion, export and investment strategies.

Network of Automotive Sources

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BMI's Middle Eastern Automotives Reports are based on an extensive network of multilateral organisations, government departments, automotive industry associations, chambers of commerce and company reports. Information sources include: