The National Automotive Design and Development Council (NADDC) has revealed that Nigeria’s vehicle market is dominated by used vehicles (popularly known as tokunbo) at 90 percent.
Speaking at the weekend in Abuja, the Director of Media, Mrs. Susan Taiwo, in a paper presentation said the high cost of new vehicles has made many people in the country dependent on tokunbo vehicles to meet their needs in the automotive industry.
In a paper titled “Understanding the Automotive Ecosystem: Nigeria’s Automotive Ecosystem: Potential, Performance and the Missing Links”, the NADDC Director explained that Nigeria’s annual vehicle demand stands at approximately 800,000, largely dominated (over 85-90%) by imported Tokunbo vehicles.
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“Broadly divided into light commercial/passenger vehicles, heavy commercial vehicles, two or three wheelers, spare parts/aftersales and repair/maintenance services, Nigeria has an installed assembly capacity exceeding 600,000 units per annum across over 30 licensed assembly plants.”
He noted that actual local production is around 5% of capacity. “Plants are operating well below optimal efficiency due to low patronage, gray imports and macroeconomic pressures.
“Current local activity is based almost exclusively on semi-knocked down (SKD) assemblies,” said the director.
Taiwo also lamented that challenges such as “high infrastructure overheads – power generation, logistics bottlenecks, high port terminal charges and exchange rate volatility, which affects SKD/CKD kits and imported raw materials” are elements driving up the cost of new vehicles in Nigeria.
“Subscale factories raise unit costs compared to high-volume global plants. High interest rates and rigorous warranty terms limit formal vehicle asset financing to less than 5% of buyers.
“High purchasing costs push individual buyers and corporate fleets toward cheap imported used cars,” he noted.
The Director stated that the country needs a “National Auto Credit Guarantee Fund” dedicated to reducing the risk of retail loans. “Manufacturing: Immediate opportunities in low-rise components such as batteries, tires, glass, brake pads, exhaust systems and wiring harnesses.
“Informal roadside mechanics adapt to modern diagnostic, electronic and safety standards, and point out that public sector procurement remains the largest potential buyer of domestic vehicles.
“Policy Implementation: Fully operationalize the NADDC-BPP policy framework that requires all MDAs to prioritize locally assembled vehicles before considering FBUs.”
The paper noted that the drive to revitalize the automotive industry in Nigeria went beyond the NADDC and sought more support from relevant government agencies and the private sector..
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