Carmakers Push Auto Industry Development in Nigeria

Half a dozen carmakers, working through their year-old African Assn. of Automotive Manufacturers, have targeted Nigeria as the second sub-Sahara country after South Africa to develop a robust auto industry on the African continent.

The group consists of BMW, Ford, General Motors, Nissan, Toyota and Volkswagen. AAAM's inaugural chairman is Jeff Nemeth, president and CEO of Ford Motor Co.’s sub-Saharan Africa region.

AAAM says Nigeria has good demographics to support an auto industry but lacks the necessary infrastructure. Currently the country has only about 44 cars per 1,000 inhabitants, one-fourth the global average, according to the group.

Nemeth led an AAAM delegation last month that met with Nigerian President Muhammadu Buhari, government ministers and several trade associations to begin forming government policies to support local growth. “It’s got to be about bringing in the whole value chain," including the ability for consumers to obtain vehicle financing, Nemeth tells Bloomberg News.

He says AAAM’s initial meetings in Nigeria in September emphasized the need to industrialize the country, develop an automotive supply base and expand the number of middle income households. The group  suggests Nigeria begin by controlling the inflow of used cars, currently the country's primary source of vehicles. AAAM recommends that Nigeria ban imported vehicles that are no more than one year old and add higher tariffs on older under-car imports.

Carmakers already are assembling modest numbers of vehicles in Nigeria from imported kits. But they are years away from local production. Low fuel prices prompted Ford earlier this year to suspend local assembly of its Ranger midsize pickup trucks in the country. Nissan tells Bloomberg it has cut back local assembly of its Patrol SUV because of a shortage of foreign currency.