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Nissan takes early advantage of Nigeria’s new auto policy

In April, Nissan's Lagos plant rolled out its first locally-assembled vehicle, a Patrol SUV, giving the OEM first-mover advantage in Africa's most promising new market. By David Isaiah

Nissan-Nigeria-2Early this year, Nigerian President Goodluck Jonathan voiced his government’s commitment to implementing the country’s new national automotive policy. It is perceived that this new policy will encourage investments in the country’s automotive industry, and is expected to increase the inflow of technical expertise as well.

Nissan has a stake in the country’s developing automotive industry and has set up its own vehicle manufacturing plants in the country. On 25 April, Nissan rolled out its first locally-assembled vehicle, a Patrol SUV, at the manufacturing plant in Lagos. This follows a signing of a Memorandum of Understanding in 2013, between the Renault-Nissan Alliance and West African conglomerate, Stallion Group.

“For Nissan, Africa is our strategic growth driver. Demand for cars is growing quickly in African markets as demonstrated by the first model being produced a mere seven months after the announcement of the new automotive policy. By acting quickly to begin production in Nigeria, we are securing for ourselves first-mover advantage,” said Takashi Hata, Nissan Senior Vice President and Chairman for the Africa, Middle East and India region.

Among the top-ten countries of the world, by population, Nigeria is one of only two countries that do not have a developed automotive industry. The country has a large population and currently ranks seventh in the world. What it also has is a growing middle-class segment of around 38 million. This rise in the middle class, the government says, translates into a potential vehicle market of around one million vehicles annually.

Annual spending on vehicle import was more than Nigerian naira 550bn (US$3.5bn), making this segment the second largest user of foreign exchange. Because of its large population, the country also has a potentially large workforce. Setting up manufacturing operations in this country would also provide access to automotive markets in West and Central Africa.

However, significant challenges persist. Nigeria’s sales have performed poorly, and the National Automotive Council attributes this to factors such as low patronage by government and the general public; very low capacity utilization; poor perception of locally made vehicles; high-cost operating environment; insufficient government protection policy; absence of low-cost long-term funds; weak and deteriorating infrastructure, and inconsistency in tariff policy.

The new policy addresses factors of the country’s automotive industry such as industrial infrastructure, skills development, standards, investment promotion and market development.

The automotive sector is a key component of the Nigerian Industrial Revolution Plan (NIRP), a five-year programme developed by the Federal Ministry of Industry, Trade and Investments. The Automotive Industry Development Plan was formulated after consultations with existing local automotive manufacturers and global vehicle manufacturers. Some like the Renault-Nissan Alliance and Toyota have indicated their willingness to invest in Nigeria, if there is a comprehensive automotive industry development plan in place.

“An automotive industry will create significant good quality employment and a wide range of technologically advanced manufacturing opportunities. This industrial base can then form the foundation of other modern advanced manufacturing activities. For example, commercial vehicle production will lead to the manufacture of agricultural, mining and railway equipment, military hardware and transport,” the policy states.

Nissan says its growth strategy in Africa gained momentum with the introduction of Nigeria’s new automotive industry policy this year. In fact, the OEM claims to be the first major vehicle manufacturer to build a car in Nigeria, in response to the introduction of the new policy.

“We are grateful to the Nigerian government for implementing automotive legislation that is conducive to investment and that was instrumental in our decision to open an assembly plant in partnership with the Stallion Group, already our exclusive distributor in Nigeria,” Nissan South Africa Managing Director Mike Whitfield has said. Whitfield also heads Nissan’s Sub Sahara Africa region.

In addition to the Patrol, Nissan’s production plans include the Almera and NP300. Since the announcement of the policy, the National Automotive Council says it has been receiving inquiries from OEMs such as Volkswagen, Honda, Kia and Tata Motors as well.

This article appeared in the Q2 2014 issue of Automotive Megatrends Magazine. Follow this link to download the full issue

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