Abstract
BMI foresees the complete collapse of the country' s automotive industry in
2009 as the owners of the
country' s only operational car plant, Peugeot
Automotive Nigeria (PAN), announced in March that
operations would close.
Industry representatives have called for government intervention in the form
of
public sector purchases of cars produced by the plant, but BMI does not
believe the long-struggling
manufacturer is viable over the medium term,
nor is it an attractive proposition for foreign investors.
Several
initiatives have been launched to save the automotive industry, including
privatisation, statebacked
car loans and capital injections, and none have
succeeded. In part this is due to the shoddy way in
which the policies
were implemented, but the chief cause of the demise of the Nigerian automotive
sector
is the poor state of the country' s infrastructure, particularly the
unreliable electricity supply. The lack of a
domestic market, competition
with cheap used car imports, and the inability to compete on export
markets
also put a glass ceiling on sales of domestically manufactured
cars.
We are forecasting a significant slowdown in real GDP growth in
Nigeria from an estimated 6.7% in
2008 to 3.6% in 2009. The banking
sector' s ability to lend in 2009 will be further curtailed by the
growing
problem of large margin loans, which are used to purchase equities on the
now-slumping
Nigerian Stock Exchange. We estimate that real growth in
private sector credit has so far slowed from a
peak of 103.7% in April
2008 to a (still high) 69.2% in November, and we anticipate further downsides
in
the months to come. As the automotive market is strongly
counter-cyclical, automotive sales will
plummet by around 36% to around
24,000 units in 2009, before making a strong recovery as the economy
revives. This is still a tiny market by global standards, despite the
country' s sizeable population. Imported
used cars will continue to swamp
the market and erode the new car market, while haulage operators will
hold
back investment in new commercial vehicles. By 2013, sales should have
rebounded to over 90,000
units as lending rates fall and the naira
strengthens, making new cars more affordable to the Nigerian
middle-class.
Data released by the Nigerian Automotive Manufacturers
Association (NAMA) shows that Japan' s
Toyota Motor consolidated its
overall market leadership in 2008 by registering the highest imports for
the year. Out of a total of 31,195 new vehicles imported, Toyota accounted for
15,855 units, of which
14,211 were passenger cars. This gave the firm the
lead in the imported car market as well as in the pickup
segment, where
the company imported 1,463 units. Toyota also came second in the bus and van
and
the special/utility vehicle segments. Asian brands fared well in 2008,
with Honda Motor, Kia Motors
and Hyundai Motor following Toyota in the
overall market, respectively. In the passenger car segment,
Toyota was
followed by Kia, Hyundai, Nissan Motor and Mitsubishi Motors, while in the
pick-up
segment, second-placed Ford Motor was the only non-Asian brand in
the top six. Nissan was the only
company to beat Toyota in the bus and van
segment whilst Honda took first place in the special/utility
segment.
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