Nigeria Autos Report - Business Monitor International - Industry Reports

Nigeria Autos Report

Nigeria Autos Report - Business Monitor International - Industry Reports
Nigeria Autos Report
Published Oct 01, 2016
29 pages — Published Oct 01, 2016
Price US$ 1,295.00  |  Buy this Report Now

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Abstract:

We expect the removal of fuel subsidies, and the resulting increase in fuel prices in Nigeria, to contribute to high inflationary pressures in the country, reducing consumer purchasing power and keeping vehicle running costs high. This fuel price hike in combination with an ailing naira and lack of access to foreign currency will continue to stifle growth in the Nigerian autos market in ----. ...In addition, there was a relaxation on rules governing how fuel importers gain access to US dollars from sources other than the central bank. Nigeria imports at least -- of its refined fuel because it lacks sufficient refining capacity, and the government expects these measures to help address fuel shortages, in part through falling demand, as fuel becomes more expensive, as well as through importers having greater spending power to import fuel. Nigerians were already prepared to pay more than what official prices reached after the recent hike by buying fuel on the black market. ...We do, however, expect that the effects of the removal of fuel subsidies will play into our already downbeat outlook for growth in Nigeria s auto industry this year, as running costs for vehicles remain high, which will reduce demand for both passenger cars and commercial vehicles. Growth in Nigeria s auto market in ---- will already be hampered by a combination of an ailing naira and a shortage of foreign currency reserves, and now high fuel costs will influence consumer purchase decisions when it comes to both new and used vehicle purchases, which will see potential buyers move towards more fuel-efficient, smaller sized engine cars such as hatchbacks as opposed to large engine pickup trucks and SUVs.

...As a result of the ongoing currency crisis and foreign exchange shortage, our bullish view on vehicle production in Nigeria has changed to reflect the economic difficulties vehicle importers and manufacturers will face over the course of the year. We therefore hold a downbeat view on autos production in the country and expect a contraction in vehicle production of --.- in ----, with average annual growth of -.- over our forecast period. ...As a result of the ongoing currency crisis and foreign exchange shortage, our bullish view on vehicle production in Nigeria has changed to reflect the economic difficulties vehicle importers and manufacturers will face over the course of the year. We therefore hold a downbeat view on autos production in the country and expect a contraction in vehicle production of --.- in ----, with average annual growth of -.- over our forecast period. The US dollar shortage will constrain car manufacturers ability to pay for and clear shipments of imported kits and vehicle components required in the manufacturing process. This combined with a weak currency will increase production costs for manufacturers, which will then be passed down to consumers in the form of high car prices. This, combined with an unreliable power grid, will be detrimental to production investment by foreign automakers into the country, which will prove challenging to Nigeria s aim to diversify the economy away from oil reliance towards becoming a car manufacturing hub on the continent.

...Since the Central Bank of Nigeria (CBN) relaxed its exchange rate policy in July ----, the naira has resumed its depreciatory trend and our Country Risk team forecasts the exchange rate to end the year at NGN---.--/USD, down from an exchange rate of NGN---.-/USD in ----, which will lead to vehicle price inflation. Furthermore, the inconsistency surrounding the official naira against the US dollar exchange rate compared to a black market rate of around NGN---/USD (as of August --), implies that there remains a considerable shortage of dollars in the Nigerian economy. ...

  
Source:
Document ID
1749-0057
Country
Industry
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Business Monitor International - Industry Reports—Established in 1984, Business Monitor International is a leading online publisher of specialist business information on global emerging markets. Business Monitor's range of quarterly services covers political risk, finance, macroeconomic performance, outlook and forecast, industry sectors and the business operating environment. Each Industry Report has been researched at source, and features latest-available data covering production, sales, imports and exports; 5-year industry forecasts through end-2012; company rankings and competitive landscapes for multinational and local manufacturers and suppliers; and analysis of latest industry developments, trends and regulatory changes.

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MLA:
Business Monitor International - Industry Reports. "Nigeria Autos Report" Oct 01, 2016. Alacra Store. Dec 08, 2016. <http://www.alacrastore.com/storecontent/Business-Monitor-International-Industry-Reports/Nigeria-Autos-Report-2026-430>
  
APA:
Business Monitor International - Industry Reports. (2016). Nigeria Autos Report Oct 01, 2016. New York, NY: Alacra Store. Retrieved Dec 08, 2016 from <http://www.alacrastore.com/storecontent/Business-Monitor-International-Industry-Reports/Nigeria-Autos-Report-2026-430>
  
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