The Global Automotive Industry

The automotive industry was started in the 1890s in Europe and the USA. It has since grown to be the major economy activity of many countries, not just in transportation of people, goods and services, but also in manufacturing activity. The manufacture of vehicles accounts for over 10-15% of the GDP of the many countries.

The manufacture of vehicles have evolved over the years and has been a trail blazer in the development of production methods, from mass production, quality control, lean manufacturing, computer aided design, manufacturing and engineering, branding, globalisation, mergers and acquisitions.

In 2008, more than 70 million motor vehicles, including cars and commercial vehicles were produced worldwide. This level of output is equivalent of a global turnover of over $3 trillion. Production declined to 61.7 million units in 2009 but is expected to have recovered by 2011. Automobiles are built using the products of many industries like steel, iron, aluminium, glass, plastics, carpeting, textiles, rubber, computer chips and more. Concrete benefits to be derived directly from the industry if properly planned and developed therefore include: -

• Conservation of foreign exchange reserves;
• Large employment generation;
• Acquisition of technological know-how; and
• Effective utilization of local raw materials and resources.

Prospects of the Automotive Industry in Nigeria

With a market size of one million Bicycles, one million motorcycles and 100,000 vehicles annually, provision of right incentives, conducive/enabling environment and the window of opportunities for export, the future for the automotive Industry is bright. These are the likely prospects.

1. Employment. The automotive industry will end up as one of the largest industries in Nigeria employing labour and generating an increase in the national income. It will also boost other industries like iron and steel, Aluminium, Plastics, Rubber, Copper, Lead, Glass, insurance and finance.
2. Boost in Non-Oil Export - With attempts made so far to enter emerging markets in Africa and possibly other parts of the world by way of export, the Industry will help to boost the non-oil export sector of the Nigerian economy.
3. Savings in Foreign Exchange - Granted that Nigeria was a market that was dominated by imports of Fully Built vehicles. The market size for vehicles translates into an annual turnover of N10 billion, 60 billion and 200 billion for bicycles, motorcycles and vehicles respectively, totalling N270 billion. The spare parts requirements for these vehicles is estimated at about 10% the vehicle costs, giving a total annual turnover of N300 billion. The more vehicles we produce locally, the more this sum of money is saved locally and save Nigeria huge foreign exchange outflow.
4. Boosting our Industrialisation rate. Manufacture of vehicles is a technology intensive industry and would boost our scientific, engineering and manufacturing capabilities, thereby increasing our industrialisation rate.
5. Development of the Small Scale Sector. The automotive industry will help to develop the small scale sector in Nigeria. Vehicle parts and components (about 2,000 in a car) are mainly manufactured by small and medium scale industries for assembly by the main manufacturers. They will also serve the spare parts market estimated at N30 billion annually.