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Thursday, August 13, 2015

South Africa Nervous Over Nigeria's Rising Auto Industry

Picture: THINKSTOCK
Nigeria’s auto plans can help us, says Nissan SA

NIGERIA will have its own motor industry whether South Africa likes it or not, says Nissan SA MD Mike Whitfield. Failure by South Africa to support it will simply open the door for other countries to benefit from the billions of rand of business that will ensue.

Mr Whitfield was responding this week to doubts about the wisdom of South Africa actively helping Nigeria to create an industry that could become a rival. Former SA trade and industry minister Alec Erwin has been advising Nigeria on setting up an industry, using his previous experience in helping to modernise SA’s motor sector.


Nigeria’s automotive policy is based on South Africa’s 1995-2012 motor industry development programme, which Mr Erwin implemented. In an interview on Monday, he said the industries would complement each other, not compete.

Several multinationals have begun building vehicles in Nigeria, and others are waiting in the wings. The companies are all assembling imported kits. Nigerian officials say they hope the industry will begin producing its own components within two years but motor company executives say it is likely to be at least 10 years before the industry starts to become self-sufficient.

Nissan SA is sending kits to Nigeria. NP300 one-ton bakkies are crated in pieces at the Rosslyn plant near Pretoria then shipped to Nigeria, where they are put together. Mr Whitfield said that this year, Nissan SA expected to send "rather more" than the 3,000 vehicles it shipped to Nigeria last year.

Rosslyn, which also produces the NP200 half-ton bakkie, will build about 40,000 vehicles this year — just more than a third of its 110,000 capacity. Mr Whitfield is expected to announce a plan before year-end to close the gap, possibly with an additional vehicle range.

However, he said the Nigerian operation would not diminish Nissan SA’s activities. The African new-vehicle market was expected to grow from 1.4 million vehicles in 2014, to 2.2 million by 2020. If that happened, there would be plenty of opportunity for two Nissan plants.

Nigeria, he said, was always going to get its own motor sector.

Though it had failed to sustain one in the 1980s, circumstances had changed. It was closer than SA to major African population centres and its new-vehicle market was negligible. Analysts say that if new import duties reduce Nigeria’s thriving used-car business, the market for new cars could explode from 40,000 to nearly 1 million.

In many respects, Whitfield said, Nigeria was similar to Brazil, which in a few years had gone from a tiny base to building more than 3 million vehicles annually.

"If, over the next 10 years, the Nigerian auto industry can achieve half as much as Brazil did over the same period, it will be doing very well," he said.

The South African industry, he added, "can’t afford not to be there. If we’re not, someone else will be. If we and Nigeria co-operate, we will develop each other."

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