The Future of Nigeria’s Automotive Industry

This report is aimed at focusing on the global state of automotive sales and how car purchasing behaviors have changed due to the drastic increase in internet and mobile penetration, rising GDP, as well as the emergence of a middle class. The findings in this report are based on the outcomes driven out of quantitative surveys conducted online with both car buyers and car dealers, and in-depth interviews with industry influencers throughout the whole Nigeria.

The State of Global Car Sales

Global automotive sales for 2015 according to the research are expected to reach close to $89M, which is believed to be a 2.4% growth from last year. Emerging markets’ share of global sales will increase from 50% in 2012 to 60% by 2020, while their share of global profits is also set to rise by 10%. Talking about new cars, Asia is believed to have the strongest purchasing intent currently, where 65% of respondents say they will buy new cars in the next two years, compared with 7% who plan to go for used cars instead.

Growth of Auto E-Commerce

Globally, auto E-Commerce has grown at such a staggering rate that now as many as 80% of new car customers and almost 100% of used car customers begin their car shopping experience online. With internet and mobile penetration significantly growing in emerging markets, the rate of moving the car shopping experience online is beginning to mirror that of Western Markets. In Nigeria, the biggest source of the new middle class in Africa, 83% of car buyers report using the Internet to conduct research on a car before making a purchase.

Changes in Nigeria Car Sales

The study however found out that 30% of car dealers in Nigeriaexperienced an increase in car sales over the past twelve months as a result of the changing economic climate in the country, while about50% of car dealers surveyed reported a decrease. Nigeria’s car industry remains relatively strong, but critical policy changes, like the National Automotive Industry Development Plan, have the potential to change the entire industry.

The Shift to Online

A report demonstrates that 83% of Nigerian car buyers turn to the internet, blogs, forums, and social media when researching cars. Also majority of car dealers responded that up to 80% of their customers turn to the internet and social media for vehicle research. As a result of information gathered, it was discovered that offline media, including newspaper classifieds and auto expos (under 10%), are declining as a source for buyers. Nigerian car dealers are also getting more and more digital when advertising their car listings. Around 80% of car dealers are now primarily focused on advertising their car listings online. William Anumudu, CEO of Globe Motors said, “Currently, the number of people turning to the internet for car purchases has been on the increase. A lot of people use the internet to search for information, products or services. Therefore any business that wants to excel must definitely go digital. This is due to the fact that Nigerians like to get involved with new trends and with the internet being easily accessibility anywhere getting information is just at their fingertips. Since people are embracing the internet all businesses online will profit.”               

The Future of Car Sales in Nigeria

Nigeria has been heavily dependent on auto imports, which account for the largest share of the country’s foreign reserves each year. There are still expectations of new vehicle assembling plants, and the number of imported vehicles has already declined significantly - from 11,563 in January to 7,400 units in February. Last month’s historic election of MuhammaduBuhari has generated uncertainty surrounding the automotive sector in the country. Although the party is pro-business, some industry stakeholders disagree with elements of the Autos policy, such as second-hand dealers who will lose out from the 70% tax on imports, or who would like to see full implementation of the policy deferred. The recently elected president could choose to reverse all or some sections of the automotive policy to secure more support with these stakeholders.

More details on Carmudi’s research report for “the booming automotive industry in Nigeria and other emerging markets”

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