As part of efforts to enhance the Nigerian automotive industry, the federal government has revealed plans to engage in the production and distribution of tyres, batteries, brake pads, and other car parts. The goal of this initiative is to increase the presence of locally-made components in the auto industry by 40 percent. During a ministerial sectoral briefing in Abuja to celebrate President Bola Tinubu’s one year in office, the Minister of Industry, Trade and Investment, Doris Anite, announced a new initiative. This program will involve working closely with manufacturers, dealers, regulatory bodies, and other stakeholders in the industry.
For years, Nigeria has relied on imports to fulfill the country’s need for vehicles and spare parts in the industry. According to research, Nigeria is responsible for nearly 80 percent of automotive components brought into West Africa, totalling $4.2 billion out of the $6.2 billion spent on importing automotive parts each year in the region. However, this new cooperative strategy is seen as crucial for addressing obstacles and maximizing Investment opportunities. The importance of Manufacturing car parts locally was underscored by the minister, who pointed out the opportunity for substantial savings in foreign exchange by producing components within the country.
Dedications to revitalizing the Nigerian Automotive industry.
Steps are being implemented to tap into the potential opportunities within the country’s automotive industry, she said. In partnership with the National Automotive Design and Development Council (NADDC), the country’s Automotive Industry regulatory agency and the lead institution for the National Automotive Industry Development Plan, the Ministry is dedicated to revitalizing the Nigerian Automotive industry. The ultimate objective is for 40% of components to be sourced locally, including items like glass, tires, batteries, brake pads, foam, seats, exhaust systems, and electrical cables, among others.
To achieve this goal, governments have established guidelines that stress the importance of cooperation between manufacturers, dealers, regulatory bodies, and other participants in the industry. It is believed that through collaboration, they can tackle obstacles, simplify procedures, and foster creativity. Anite said the industry in Nigeria is on the verge of finalizing agreements for off-take, marking a historic milestone. She assured suppliers that with the MOUs and agreements in place, car assemblers and manufacturers will purchase their products. Assemblers will also have assurance of consistent quality and standards in their supply chain, leading to affordable brand new cars for consumers.
Increasing presence of fake spare parts in the market.
Nigeria’s automotive parts market ranks as the second largest in Sub-Saharan Africa for imports. When it comes to service parts such as filters and spark plugs dominated the market in 2018, making up 45 percent of the total value. Wear parts like brake pads, discs, and shock absorbers followed closely behind, claiming a 35 percent share of the market. The information provided indicates that drivers in Nigeria typically spend approximately $350 a year on car parts.
Experts in the industry have highlighted the significant potential of the sector, but have also noted its heavy reliance on imports. Despite efforts to invest in and promote local manufacturing, progress on producing parts and assembling vehicles has been slow. Recently, industry operators have expressed concerns about the increasing presence of fake spare parts in the market. It is crucial, according to experts, to address the issue of substandard spare parts entering the sector. Experts warn that fake parts pose a dual threat by jeopardizing the safety of vehicles and undermining trust in the legitimacy of cars and their components.
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The Standards Organisation of Nigeria reported that a vast majority of auto spare parts being brought into the country fail to meet the required standards. The reliance on imported used parts and low-quality new parts continues to pose a challenge for the sector. The responsibility for addressing the problem of substandard vehicle spare parts falls on dealers and importers. Used parts make up almost 90 percent of the aftermarket share, underscoring the significance of this issue. While it was observed that Nigerians’ reasons for sourcing used parts are diverse, it could possibly be influenced by a lack of trust in new ones.