Nigeria’s auto market set for boom on petrol/diesel vehicles ban


Some Nigerians are optimistic that the nation will reap bountifully from the plans by many countries in Europe and other continents including the United Kingdom, France and India to stop the use of petrol/diesel-powered vehicles from 2030.

The Scottish government on Tuesday said it would phase out petrol and diesel cars and vans by 2032, eight years ahead of the UK’s target.

India had earlier announced that every vehicle sold in the country should be powered by electricity by 2030. In July, Britain said that it would halt the production of petrol and diesel automobiles from 2040 as part of a major push to meet its climate change target. This came after France said it planned to ban the fossil-fuel cars by 2040, in a drive to electric vehicles.

Norway, Germany and The Netherlands are among 1o other countries that have set sales targets for electric cars and to completely ditch petrol and diesel vehicles in favour of cleaner vehicles.

Although the Nigerian Automotive Design and Development Council, Lagos Chamber of Commerce and Industry and PricewaterhouseCoopers Limited have said the nation will ultimately have to embrace electric vehicles, with the continued difficulty in generating sufficient electricity for home and industrial uses, analysts say it may take more than three decades to transit to electric cars.

Cheap vehicles, affordable spare parts and reduced maintenance costs are some of the anticipated benefits that could come to Nigeria and other countries where petrol-diesel vehicles will still be in use, according to some auto analysts.

With the probable crash in prices of new vehicles, they said this should provide an opportunity for many people to own new cars and others to replace their unserviceable jalopies.

The expected boom in the auto industry, they said, would also translate into job opportunities for a huge number of people as well as boost the nation’s industrial sector.

Notwithstanding the recent announcement by the NADDC that the country assembled 10,673 vehicles between January and December last year, Nigeria still heavily relies on imported (fully built) vehicles to cater for the huge automobile demand.

The Federal Government has not only raised the import duty from 22 per cent to 70 per cent; it has also slashed to zero per cent the duty on auto components imported by vehicle assembly plants.

The government said it was meant to encourage local production of automobiles, reduce capital flight, boost industrialisation and create employment opportunities for the people.

And no fewer than 53 firms have thus been approved to set up auto assembly plants in the country, many of which have commenced operation.

About 550,000 automobiles are said to be imported annually, with 500,000 of them coming in as used or tokunbo vehicles, representing about 90.1 per cent; and only 50,000 units are brought into the country as new, which is 9.09 per cent of the total vehicle imports.

The Chief Economist at the PwC Limited, Dr. Andrew Navin, lamented that the auto industry was dominated by imported used cars, four years after the introduction of a new auto policy and stressed the need to close the gap.

Mr. Kunle Jaiyesimi, the deputy managing director of CFAO Motors Nigeria, which recently transformed into Massilia Motors Limited, said it was not out of place to expect that the plans by a number of countries to outlaw the use of petrol/diesel-powered vehicles from 2030 to 2040 would provide the required tonic to revive Nigeria’s auto industry and make it flourish again.

He said, “When the effective date (for the ban on petrol-diesel vehicles) is approaching, many auto manufacturers will like to rush out their old stock and push them to willing buyers. “That will be an opportunity for Nigeria to buy new vehicles at cheaper prices,” he said, in a telephone interview with one of our correspondents.

According to him, the purchasing power of the people has been very low, which largely accounts for the drastic drop in the demand for new vehicles, no thanks to the high cost of vehicles occasioned by the recent increase in import duty on new vehicles from 22 per cent to 70 per cent.

He said, “When we started the year, the demand increased and it peaked between March and April; but it dropped in the last quarter.”

Dr. Oscar Odiboh, a university lecturer and consultant on automobile to a number of firms, also felt the development should provide an opportunity for the government to improve the auto sector.

He said, “The automakers will be willing to dispose of their old stock at give-away prices. I therefore see an opportunity here for the government and the people in the auto industry to make more money. Even after the nation has switched over to electric cars, diesel and petrol vehicles will still be used just like now where we have manual transmission automobiles being used side-by-side with automatic.

“So, I’ll urge us to make hay while the sun shines and this sun is not going to shine forever. We can also refocus our refineries to get prepared to produce for the influx of vehicles anticipated to come into the Nigerian market. This can remove the fears that the demand for our crude would drop drastically. The local market should be able to take care of the excess production.

“Let us take advantage of this. All government agencies concerned with this should be meeting now and mapping out strategies to achieve this.”

The Director-General, Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf, said when the vehicles are shipped into Nigeria due to unavailability of buyers abroad, affordability would increase locally since the cars would be cheaper.

However, he said, this would increase the nation’s dependence on vehicles not environmentally friendly at a time when the whole world would be trying to phase them out because they were damaging the environment.

He noted that this would put Nigeria at odds with the rest of the world and defeat its promotion of the United Nations Sustainable Development Goals.

“It is always good for Nigeria to key into the vision of the whole world, especially regarding the issue of environmental protection. Driving vehicles powered by fossil fuel at a time when they are being removed from Europe and other advanced economies will put us at odds with the vision of the whole world which is to preserve the environment,” he said.

Beyond the benefit of getting cheaper vehicles, the President of the National Council of Managing Directors of Licensed Customs Agents, Mr. Lucky Amiwero, also warned against the pollution that would be caused by those automobiles.

But some analysts are of the view that new car buyers may be disappointed if they expect prices of new vehicles to drop drastically in the wake of the ban on fossil-fuel vehicles by some European countries and others.

Two experts who uphold this view are the Executive Director, Truckmasters Nigeria Limited, Dr. Oseme Oigiagbe, and the Managing Editor of ‘Transport Day’, Mr. Frank Kintum.

Oigiagbe, a former Chairman, Automotive Group of the LCCI, said that the prices of such vehicles would only be determined by the exchange rate, adding that as long as the importers still had problems sourcing for foreign exchange, it will be a mirage to expect prices to fall.

According to him, if the exchange rate remains N370 to a dollar, the prices of cars will still be high.

Kintum explained that since the change was going to be from combustion engine to electric, leaving other vehicle components unchanged, this might not translate into any significant difference in terms of cost of vehicles locally.

The auto consultant also said, “Since the chassis, shell, tyre and transmission of the vehicle will still be the same, I don’t foresee so much difference in prices.”

He also said the development would not adversely affect the local assembly plants who were still struggling to get buyers for their products.

“They (local auto assemblers) don’t do engines. They import parts and assemble them. The technology will still be the same,” Kintum said.

The nation is also expected to gain tremendously from the expected flourishing auto spare parts market that will follow the ban on combustion engine vehicles, as attested to by Jaiyesimi, Odiboh and other experts.

For instance, Jaiyesimi said vital spare parts needed for vehicles being imported would come with the stock in sufficient amount.

Odiboh, Kintum and Oigiagbe said the spare parts market should receive a boost because the makers would continue to produce the parts, many of which would remain unchanged.

The experts also urged all players to plan ahead and think about how to have a smooth transition from combustion to electric vehicles by setting a date for the switchover.

“There is a need for a smooth transition from fossil fuel-powered vehicles to electric vehicle. Setting 2050 or any other realistic date should be jointly agreed to by all stakeholders. And people should not think the date will never come; it is around the corner. The EVs should be gradually introduced, so that there won’t be the issue of affordability much later,” Odiboh said.

Prof. Okey Iheduru of the Arizona State University said, “Unless auto financing market is developed, new vehicles will continue to be beyond the reach of most Nigerian.”

The Director-General, NADDC, Mr. Jelani Aliyu, said while the local auto players should be mindful of the happenings globally in the automotive industry, they should look “at new technologies that can be adapted for Nigeria, with the ultimate goal of providing cost-effective vehicles for the people.”

He pledged that the current administration was willing to give the necessary support to make it a win-win situation for both the government and genuine investors.

An indication that some Nigerian auto firms are already thinking of doing electric cars emerged recently with an indigenous firm, Nigus Enfinity, hinting that it would introduce electric vehicles in 2018 and establish the EV assembly plant in 2020.


Please enter your comment!
Please enter your name here