Nigeria’s 40 auto plants produce below 5% capacity – NADDC

FILE: DG, NADDC, Oluwemimo Joseph Osanipin

Nigeria’s nearly 40 licensed vehicle assembly plants, with a combined installed capacity of more than 600,000 vehicles annually, are currently producing less than five per cent of their potential output, the National Automotive Design and Development Council has said.

The development highlights the widening gap between Nigeria’s capacity to assemble vehicles locally and the actual output of the industry, despite an estimated annual demand of about 800,000 vehicles.

The Director-General of the NADDC, Joseph Osanipin, disclosed this in a statement released on Friday, attributing the low capacity utilisation to weak vehicle financing, low patronage, grey imports, macroeconomic pressures and gaps in policy enforcement.

“Nigeria features an installed assembly capacity exceeding 600,000 units per year across almost 40 licensed assembly plants. Actual local output hovers around five per cent of capacity. Plants operate well below optimal efficiency due to low patronage, grey imports and macroeconomic pressures,” Osanipin said.

He said more than 85 to 90 per cent of Nigeria’s annual vehicle demand was still being met by imported used vehicles, popularly known as Tokunbo, rather than locally assembled new vehicles.

According to him, the country’s challenge is not the absence of a market or production capacity, but the lack of an ecosystem capable of making locally assembled vehicles affordable and accessible.

“Nigeria is not short of demand or installed capacity. We are short of an ecosystem that makes locally assembled vehicles affordable and accessible,” he said.

Osanipin said local assembly activities were still heavily dependent on Semi-Knocked Down kits, with limited local value addition, while high production costs, foreign exchange volatility, logistics bottlenecks, port charges and inconsistent fiscal policies continued to undermine competitiveness.

He added that the target of achieving 40 per cent local content through activities such as stamping, welding, body building and engine and transmission integration remained largely unmet.

The NADDC boss identified vehicle financing as one of the most critical gaps, noting that fewer than five per cent of vehicle buyers had access to formal retail credit because of high interest rates and stringent collateral requirements.

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He therefore called for the establishment of a National Automotive Credit Guarantee Fund to reduce lending risks and make locally assembled vehicles more affordable.

“Nigeria First Procurement: The public sector is the largest potential buyer. Full operationalisation of the NADDC-BPP policy framework mandating MDAs to prioritise locally assembled vehicles before considering FBUs is critical to guarantee demand,” he said.

Osanipin also called for increased private-sector investment in compressed natural gas and electric vehicle infrastructure, describing both as immediate growth opportunities for the automotive industry.

He said CNG offered a cheaper transportation alternative following the removal of the petrol subsidy, while electric vehicles could gain traction in the two- and three-wheeler segments and urban transport.

“EVs have high potential for two/three-wheelers and urban transit, but will require localised charging infrastructure, battery swapping networks, and specialised technical training,” he said.

On charging infrastructure, Osanipin said the Council had piloted stations at selected high-end outlets but stressed that widespread adoption would depend largely on private investment.

“There is no way you can travel with an electric vehicle now in Nigeria if investors don’t come in and start putting charging stations all over,” he said.

“The automotive industry is not a government industry. It is for individual investors to come in and take up from where we stop and invest, especially in the new trend of CNG and electric vehicles.”

The NADDC, the Federal Government agency responsible for promoting the automotive industry under the Nigerian Automotive Industry Development Plan, said it would continue working with manufacturers, financial institutions and state governments to move Nigeria from an import-dependent vehicle market to a manufacturing and export hub.