By Oluwakemi Kindness
More than 30 automotive assembly plants in Nigeria are operating at just 5% of their combined capacity as imported used vehicles, popularly known as tokunbo, continue to dominate the market.
The situation has left about 570,000 units of potential annual production unrealised, according to the National Automotive Design and Development Council (NADDC).
The council disclosed this on Thursday in Abuja at a capacity-building workshop for members of the Commerce and Industry Correspondents Association of Nigeria (CICAN).
Tokunbo dominates 800,000-vehicle market
Speaking on behalf of NADDC Director-General Joseph Osanipin, the council’s Director of Press and Public Relations, Susan Bisong-Taiwo, said Nigeria’s annual vehicle demand stands at roughly 800,000 units.
But imported pre-owned vehicles account for between 85% and 90% of the market, she said.
“Annual market demand sits at roughly 800,000 vehicles, but over 85 to 90 percent of this market is dominated by imported pre-owned units, popularly known as tokunbo.”
Nigeria has installed assembly capacity of more than 600,000 vehicles annually across licensed plants, but actual local output remains at about 5%.
“Our plants are operating well below optimal efficiency due to low patronage, grey imports and severe macroeconomic pressures,” Bisong-Taiwo said.
High costs weaken local assembly
The NADDC said high production and operating costs are further limiting the competitiveness of local assemblers.
Bisong-Taiwo said the industry remains heavily dependent on Semi-Knocked Down (SKD) assembly, exposing manufacturers to high infrastructure and power costs, port delays and foreign exchange pressures.
“Current local activity relies almost entirely on Semi-Knocked Down (SKD) assembly. We face high infrastructure overheads, power generation costs, port delays and foreign exchange exposure on imported kits.”
The council is pushing for deeper local value addition to reduce dependence on imported components.
It is targeting at least 40% local content through activities including stamping, welding, body building and local component sourcing.
Financing gap limits demand
Limited access to affordable vehicle financing is another major constraint on the market.
Bisong-Taiwo said less than 5% of vehicle purchases in Nigeria are backed by formal asset financing because of high interest rates and stringent collateral requirements.
“Establishing a dedicated National Automotive Credit Guarantee Fund is the missing link to derisk retail lending.”
The proposed fund is expected to make vehicle financing more accessible while reducing lending risks for financial institutions.
Government procurement seen as key market
The NADDC also identified public sector procurement as a major potential source of demand for locally assembled vehicles.
Bisong-Taiwo said Ministries, Departments and Agencies are required under the existing NADDC and Bureau of Public Procurement (BPP) framework to prioritise locally assembled vehicles before considering foreign imports.
Stronger implementation, she said, could provide a significant market for domestic assemblers and help improve plant utilisation.
CNG, EVs offer growth opportunities
The council also sees Compressed Natural Gas (CNG) and Electric Vehicles (EVs) as potential growth areas for the industry.
Bisong-Taiwo said CNG could provide immediate cost relief for commercial fleets, while EVs could support urban transportation.
“CNG provides immediate cost relief for bus and commercial fleet conversions, while EVs offer huge potential for urban transit.”
She said the council’s strategic vision is to position Nigeria as West Africa’s primary hub for CNG and EV assembly and component fabrication under the African Continental Free Trade Area (AfCFTA).
