Nigeria's auto assembly plants produce below 5% capacity amid import dependence, NADDC says

Nigeria's nearly 40 licensed vehicle assembly plants are operating at less than five per cent of their combined installed capacity of over 600,000 vehicles a year, according to the National Automotive Design and Development Council. The disclosure came from NADDC Director-General Joseph Osanipin in a statement released on Friday.

The council said the country's annual vehicle demand is estimated at about 800,000 units, but local plants are nowhere near meeting it. More than 85 to 90 per cent of that demand is still satisfied by imported used vehicles, popularly called Tokunbo.

Installed capacity versus actual output

Osanipin said the gap between capacity and production is wide. “Nigeria features an installed assembly capacity exceeding 600,000 units per year across almost 40 licensed assembly plants. Actual local output hovers around five per cent of capacity. Plants operate well below optimal efficiency due to low patronage, grey imports and macroeconomic pressures,” he said.

He argued that the country does not lack demand or production capacity. “Nigeria is not short of demand or installed capacity. We are short of an ecosystem that makes locally assembled vehicles affordable and accessible,” Osanipin said.

Why plants are underperforming

Local assembly is still heavily dependent on Semi-Knocked Down kits, meaning limited local value addition. High production costs, foreign exchange volatility, logistics bottlenecks, port charges and inconsistent fiscal policies continue to undermine competitiveness, the NADDC boss said.

The target of achieving 40 per cent local content through stamping, welding, body building and engine and transmission integration remains largely unmet.

Financing and procurement gaps

Vehicle financing is one of the most critical gaps. Osanipin noted that fewer than five per cent of vehicle buyers have access to formal retail credit because of high interest rates and stringent collateral requirements. He called for the establishment of a National Automotive Credit Guarantee Fund to reduce lending risks and make locally assembled vehicles more affordable.

He also pushed for the full operationalisation of the NADDC-BPP policy framework requiring government agencies to prioritise locally assembled vehicles before considering imported Fully Built Units. “Nigeria First Procurement: The public sector is the largest potential buyer. Full operationalisation of the NADDC-BPP policy framework mandating MDAs to prioritise locally assembled vehicles before considering FBUs is critical to guarantee demand,” he said.

CNG and electric vehicles push

Osanipin called for increased private-sector investment in compressed natural gas and electric vehicle infrastructure. He said CNG offers a cheaper transportation alternative following the removal of the petrol subsidy. Electric vehicles, he added, could gain traction in the two- and three-wheeler segments and urban transport.

“EVs have high potential for two/three-wheelers and urban transit, but will require localised charging infrastructure, battery swapping networks, and specialised technical training,” he said.

The council has piloted charging stations at selected high-end outlets, but Osanipin said widespread adoption depends on private investment. “There is no way you can travel with an electric vehicle now in Nigeria if investors don't come in and start putting charging stations all over,” he said. “The automotive industry is not a government industry. It is for individual investors to come in and take up from where we stop and invest, especially in the new trend of CNG and electric vehicles.”

For Nigerian businesses and consumers, the continued underuse of local assembly capacity means the naira will keep bleeding on vehicle imports, while local jobs and value addition stay limited. The NADDC says it will keep working with manufacturers, financial institutions and state governments to shift the country from an import-dependent vehicle market to a manufacturing and export hub.