Advancing Nigeria’s automotive industry: A roadmap for promoting locally assembled vehicles
By M. Bello Abba Gana Nigeria has long been over-reliant on imported vehicles, with only brief periods of progress in local manufacturing, such as the Peugeot era. Recent statistics highlight the magnitude of this dependency: in 2024, Nigerians spent a staggering N1.26 trillion on passenger cars (Odunewu, 2025). While annual vehicle demand reaches approximately […]
By M. Bello Abba Gana
Nigeria has long been over-reliant on imported vehicles, with only brief periods of progress in local manufacturing, such as the Peugeot era. Recent statistics highlight the magnitude of this dependency: in 2024, Nigerians spent a staggering N1.26 trillion on passenger cars (Odunewu, 2025). While annual vehicle demand reaches approximately 720,000 units, local production accounts for merely 14,000 units—a mere 1.94 per cent of the market (International Trade Administration, 2023). Continued dependency on imported cars will lead to higher import bills, worsening Nigeria’s trade deficit, stifled local manufacturing, weak after sales support and loss of investment opportunity in that sector
The introduction of the National Automotive Industry Development Plan (NAIDP) in 2014 created a foundation for growth in the local automotive sector. This policy initiative has enabled companies like Innoson Vehicle Manufacturing (IVM), CIG Motors, and Mikano Motors to establish operations and gradually expand their presence in the Nigerian market. Initial consumer concerns about the quality of locally assembled vehicles have diminished significantly.
Today, if you visit the showrooms of these local brands, you will be impressed by the substantial progress made in design, engineering, and build quality. Despite substantial customs duties on imported vehicles, improvements in locally assembled vehicle quality, government support, and agencies like the National Automotive Design and Development Council (NADDC) promoting domestic production, adoption remains low. The primary barrier is affordability.
As of 2024, the average vehicle on Nigerian roads was approximately 14 years old, 2010 model (Ajifowoke, 2021). A 14-year-old car typically loses about 90-95 per cent of its original value, making it accessible to average Nigerian consumers. This creates a fundamental disconnect between buyers seeking affordable used vehicles and manufacturers producing new ones. Majority of Nigerians cannot afford new cars.
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One solution can address both the immediate and long-term challenges: directing entities that must purchase new vehicles to buy exclusively from local assemblers. This approach would eventually create a robust used car market that will trickle down to the majority who prefer and can only afford older, more affordable vehicles.
The market for brand-new vehicles in Nigeria is limited, with government agencies and large corporations comprising the main buyers. While some progress is evident—IVM buses now transport passengers at airports, for instance—the majority of government-procured vehicles remain foreign brands. Government fleets are dominated by imported models like Toyota Corollas, Camrys, Prados, and Land Cruisers. According to the National Bureau of Statistics, out of 11.8 million cars in Nigeria in 2018, approximately 135,000 (1.1%) were registered as government vehicles (International Trade Administration, 2023). Implementing a policy mandating government agencies to procure only locally assembled vehicles would significantly expand the market for domestic manufacturers.
As government agencies and large corporations purchase new locally assembled vehicles, these will eventually be depreciated then auctioned, sold or just given to individuals, eventually creating a substantial used car market for domestic brands when some of these individuals opt to sell off. Tax incentives could further encourage companies to procure Nigerian vehicles over imported ones.
The government can also incentivise the average consumer to buy local. The newly formed Nigerian Consumer Credit Corporation (CREDITCORP) partnered with Autochek to provide a nationwide auto financing programme aimed at empowering 50,000 first-time car owners (Business Day, 2025). An amazing initiative to be commended.
This initiative, however, would have been an opportunity to promote locally assembled cars. It could have been loans exclusively for locally assembled cars at concessionary rates. Best case scenario, adoption will significantly improve and the initiative will be a success. Worst case scenario, valuable data for lack of adoption could be collected which could prove beneficial in the long term.
Beyond the economic impact, such a policy would address the psychological barrier of distrust in Nigerian-made products—a factor that particularly affects the automotive industry, where safety concerns are paramount. Nigeria’s socio-political structure provides a unique opportunity to shift perceptions. Politicians and high-ranking government officials—senators, ministers, governors, heads of MDAs, and especially the President—function as the country’s primary celebrities and influencers.
If these influential figures exclusively used locally assembled vehicles, it would establish a powerful precedent: “If Governor XYZ drives this car, it must be good.” This visible endorsement would cascade down to the everyday consumers, gradually building confidence in domestically produced vehicles and other Nigerian-made products.
The transition to greater utilization of locally assembled vehicles offers multiple economic advantages:
- Reduction in foreign exchange outflow from imported vehicles
- Expansion of the local automotive market, creating more value, jobs, and investment
- Increased competition driving innovation and quality improvement
- Greater investment in research and development
- Local manufacturing of increasingly complex vehicle components
- Potential exportation of vehicles to other African countries under the African Continental Free Trade Area (AfCFTA).
A potential challenge is that many of Nigeria’s largest vehicle assemblers have significant foreign ownership, which could result in profits leaving the country. Several policy options could address this concern; however, a minimum public ownership requirement policy is favourable. This policy would mandate companies that reach a certain size, especially those benefiting from import waivers and tax breaks, to maintain at least a portion (preferably 30%) of their shares on the Nigerian Exchange (NGX) through an IPO. This would increase NGX activity, shining light on an investment vehicle Nigeria ought to promote.
Other solutions could include Public-Private Partnerships (PPP) and/or differential taxation for foreign-owned versus domestically owned companies. Nigeria can also learn from models like Malaysia’s Proton and Indonesia’s Astra and Esemka.
The market for vehicle spare parts in Nigeria was valued at $4.4 billion in 2018 (africon, 2018), with most components being imported and many either counterfeit or used (“tokumbo”). A transition to locally assembled vehicles would enable car owners to access authentic, new parts directly from manufacturers, keeping a significant portion of this industry’s value within Nigeria.
Agencies such as NADDC and the National Agency for Science and Engineering Infrastructure (NASENI), together with policymakers, must play a crucial role in driving the transition toward local vehicle adoption. Industry-academia collaboration is also vital to foster research, innovation, and develop the technical expertise needed to sustain a thriving automotive sector.
By strategically leveraging government procurement power, creating appropriate ownership structures, and building public confidence, Nigeria can gradually shift from import dependence to a robust domestic automotive ecosystem. This transition would preserve foreign exchange, create employment, develop technical capabilities, and potentially position Nigeria as a regional automotive manufacturing hub under the AfCFTA framework.