Used vehicles: Nigeria ‘ll remain dumping ground without auto policy — AAAM
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By Theodore Opara
The African Association of Automotive Manufacturers, AAAM, the continent’s only dedicated automotive industry body has blamed the influx used vehicle into Nigeria on the inability of the Nigeria government to give legal backing to nation’s auto policy.
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Victoria Backhaus–Jerling, Chief Executive Officer of AAAM said recently, “ without legislation and effective implementation of a progressive automotive policy, the country risk an unchecked influx of grey import and reduced investors confidence in the sector”.
The AAAM is Africa’s only dedicated automotive industry body, established to drive growth and industrialization of the continents automotive sector.
The AAAM works closely with African governments and Pan Africa organisations to develop enabling policies, attract investment and implement industrial strategies that support the creation of inclusive and resilient automotive ecosystem.
Backhaus-Jerling said “ Nigeria is a market with enormous potential. However, the automotive policy, ( Nigeria Automotive Industry Development Plan NAIDP) remains without legal backing – a significant limitation to its enforcement and long- term success. A normal auto bill still needs to be passed and enacted into law”.
According to her, “AAAM continues to engage key stakeholders from the industry and we value our strong partnership with the National Automotive Design and Development Council (NADDC). Political will is essential. Without legislation and effective implementation of a progressive automotive policy, the country risks an unchecked influx of grey imports and reduced investor confidence in the sector. I saw many empty plants, which used to manufacture vehicles and components. This was sad to see, as on the other hand hundreds of thousands of used vehicles get imported into the country without adding any value.”
She noted that developing and implementing an effective auto programme is always the first step as it signals potential investors and local companies as well as the government’s commitment to develop an industry. Our industry is in it for the long haul, but for that we need planning and assurance.
She disclosed that, the automotive industry operates as a global production and trade system, led by Original Equipment Manufacturers, OEMs and driven by economies of scale. To be competitive, countries must manufacture at sufficient scale – and this is where the African Continental Free Trade Area (AfCFTA) becomes a game-changer. With the right policies, strategy, and ecosystem development, Africa has the potential to produce between 3,500,000 and 5 million vehicles annually.
Achieving this requires countries to implement national auto policies that are independent but compatible. Regional hubs will play a central role – where a lead country focuses on vehicle assembly while neighbouring countries participate in the value chain through parts manufacturing, logistics, and support services.
Regional alignment is critical, particularly in ensuring complimentary rather than competition. As volumes grow, component manufacturers will follow OEMs once there is sufficient scale to justify their investment.
“Ultimately, the architecture of national policies must align with a continental framework – one that enables regional production, enhances trade, and drives long-term manufacturing competitiveness. I truly believe that more countries can become part of an automotive value chains – countries must determine which role they want to play and AAAM can support, she noted.
“Ultimately, the architecture of national policies must align with a continental framework – one that enables regional production, enhances trade, and drives long-term manufacturing competitiveness. I truly believe that more countries can become part of an automotive value chains – countries must determine which role they want to play and AAAM can support, she noted.
On why there are few members of AAAM in Nigeria, she said, “Most of our current members are based in countries with established or emerging national auto policies that align with our broader continental objectives. However, we are confident that once Nigeria’s Auto Bill is passed and the policy environment stabilises, more stakeholders will recognise the value of joining AAAM and actively contributing to the development of the industry.
Speaking passionately about Nigeria auto industry, she revealed: “When you’re in Europe, people always ask about Nigeria — it’s such a massive market with a huge population and an automotive legacy that’s hard to ignore. At one point, Peugeot alone was manufacturing around 90,000 vehicles a year there.
Unfortunately, that has since stopped. The industry is still very much present, but it’s waiting — waiting for the government to implement the draft auto bill. There’s significant interest from OEMs and component manufacturers, especially those geared toward the aftermarket, but again, they’re holding back due to policy uncertainty. One of the major challenges Nigeria, like much of Africa, faces is the overwhelming influx of imported used vehicles, which undermines demand for new ones. The right regulatory framework is needed”.
On whether there is a conflict of interests among member states of AfCFTA regarding issues like Rules of Origin, local value addition and applicable tariffs, she said.
There is ongoing discussion – not necessarily conflict – among member states regarding the Rules of Origin (RoO) for auto under the AfCFTA framework. At its core, RoO determines the level of local content required for a vehicle to be considered “Made in Africa.”
Continuing, she explained: “There are two proposals being debated. One calls for 40 percent local value addition, meaning that at least 40 percent of a vehicle’s components or value must be derived from within Africa – which is achievable also due to cumulation. This higher threshold is supported by the industry and the majority of African countries as it encourages real localisation – including the development of a component manufacturing base, beneficiation of raw materials, and broader industrialisation. For instance, copper from Zambia and other raw materials across the continent could be processed and utilised locally, stimulating multiple sectors of the economy.
The alternative proposal suggests a 30% local content threshold. This is being supported by a few smaller countries, which argue that a lower threshold would allow them to attract investments. I believe the opposite. I believe you won’t be able to build an industry at 30%.
AAAM and the AfCFTA secretariat strongly believe that the RoO will be concluded at 40 percent by October this year. This will encourage the industry to grow in supporting countries in finding their optimal position within the value chain. Assembly alone is not a sustainable long-term strategy. For true transformation, the continent must aim for higher levels of localisation and integration into the full automotive value chain.
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