The National Automotive Design and Development Council (NADDC) has revealed that pre-owned vehicles, commonly referred to as tokunbo, dominate the Nigerian automotive market, accounting for an overwhelming 90 percent of vehicle sales. This startling statistic was shared during a recent presentation in Abuja by Mrs. Susan Taiwo, the Director of Media at NADDC.

In her presentation titled "Understanding the Automotive Ecosystem — Nigeria’s Automotive Ecosystem: Potential, Performance, and the Missing Links," Taiwo highlighted that the high costs associated with brand-new vehicles have driven many consumers toward the more affordable tokunbo options. She noted that Nigeria’s annual demand for vehicles stands at approximately 800,000, with over 85-90% of these being imported used cars.

Taiwo explained that the Nigerian automotive sector is broadly segmented into various categories, including light commercial and passenger vehicles, heavy-duty commercial vehicles, two and three-wheelers, spare parts and aftermarket services, and repair and maintenance operations. Despite having an installed assembly capacity of over 600,000 units annually across more than 30 licensed assembly plants, the actual local output remains disappointingly low at around 5% of this capacity.

The NADDC director attributed the underperformance of local assembly plants to several factors, including low patronage, gray imports, and adverse macroeconomic conditions. She pointed out that many plants operate well below their optimal efficiency, primarily relying on semi-knocked down (SKD) assembly methods.

Taiwo further elaborated on the challenges facing the automotive industry in Nigeria, citing high infrastructure overhead costs, logistical bottlenecks, elevated port terminal charges, and foreign exchange volatility as significant contributors to the rising prices of new vehicles. She remarked, "Sub-scale factory runs elevate unit costs compared to high-volume global plants," highlighting the economic pressures that hinder the growth of local manufacturing.

Additionally, Taiwo noted that high interest rates and stringent collateral requirements limit formal vehicle asset financing to less than 5% of potential buyers, compelling individuals and corporate fleets to opt for cheaper imported used cars. To address these issues, she called for the establishment of a dedicated National Automotive Credit Guarantee Fund aimed at reducing the risks associated with retail lending.

The presentation also identified immediate opportunities in manufacturing components such as batteries, tires, glass, brake pads, exhaust systems, and wiring harnesses. Taiwo emphasized the need for informal roadside mechanics to adapt to modern diagnostic, electronic, and safety standards, while also suggesting that public sector procurement could serve as a significant buyer of domestically assembled vehicles.

In conclusion, Taiwo stressed that revitalizing Nigeria's automotive industry requires collaboration beyond the NADDC, calling for increased support from relevant government agencies and the private sector to foster growth and development in this crucial economic sector.