Nigeria’s Ambitious Plan to Modernise the Automotive Industry
The Nigerian government has unveiled a bold initiative aimed at transforming the country’s automotive sector by tapping into its informal vehicle recycling market. This move is expected to generate over N150bn annually from 2026, as part of broader reforms designed to modernise and regulate the industry.
The National Automotive Design and Development Council (NADDC) announced this in a statement, with Director-General Joseph Osanipin highlighting the launch of a comprehensive End-of-Life Vehicle (ELV) programme. The policy aims to formalise the recycling of vehicles that have reached the end of their useful lives, turning what is currently an environmental and safety issue into a significant economic opportunity.
Osanipin explained that the model would mirror practices seen in developed countries, where vehicle buyers pay a fee during registration to cover the cost of disposal when the vehicle is no longer in use. “When it gets to the end of its life, somebody has to be responsible for the disposal,” he said.
The proposed system will require a modest fee at the point of vehicle registration to fund environmentally sound disposal and recycling. While Osanipin acknowledged that this may face initial public resistance, he argued that the long-term benefits would outweigh the short-term challenges.
A Thriving Informal Market with Untapped Potential
Nigeria already has a robust informal second-hand auto parts market, often referred to as the Belgian parts market. This market thrives due to concerns about the durability and quality of new parts. According to studies by the NADDC, over 85% of components from end-of-life vehicles remain reusable or recyclable, providing a strong foundation for a formal circular economy.
Osanipin pointed out that this could create a multi-billion naira industry if managed effectively. “If someone has an alternative, instead of abandoning vehicles by the roadside, you can turn them in and still make something out of them,” he said. Beyond revenue generation, the recycling ecosystem is expected to create thousands of jobs across dismantling, refurbishing, logistics, and component resale segments.
Rebounding Vehicle Import Market
The announcement comes against the backdrop of a rebound in Nigeria’s vehicle import market this year. Recent reports indicate that the value of passenger motor car imports rose to about N1.01tn in the first nine months of 2025, up from roughly N894bn in the same period last year. This signals a resurgence in demand, driven by improved foreign exchange market stability and increased importer confidence.
Data from the National Bureau of Statistics shows that the recovery gained traction in the second half of the year, with the third quarter posting a sharp uptick in import value that more than offset earlier slower activity. While this highlights the resilience of Nigeria’s auto market, especially the used (“Tokunbo”) segment, it also underscores persistent challenges such as high landing costs, currency exposure, and structural dependence on imports.
Strengthening Regulations and Standards
As part of the reforms, the NADDC will introduce mandatory pre-export certification for all used vehicles imported into Nigeria from 2026. This measure aims to curb the dumping of rusted and end-of-life vehicles into the country. Osanipin noted that Nigeria is one of the few African countries without such a requirement, making it a destination for exporters seeking to offload unroadworthy vehicles.
He recounted a meeting with a foreign exporter who admitted shipping eight containers of end-of-life vehicles to Nigeria because it offered the “highest profit.” “We will ensure that importers are held responsible so that whatever you are buying, you know what you are buying,” he said. The cost of certification will be borne by exporters, not Nigerian consumers.
Future-Proofing the Sector
In a parallel push to future-proof the sector, Osanipin unveiled plans to convert petrol and diesel-powered vehicles to electric vehicles (EVs) and compressed natural gas (CNG), in line with the National Automotive Industry Development Plan (NAIDP).
The council has commenced extensive training programmes on EV technology, vehicle conversion, and alternative fuel systems for both regulators and industry players. “Capacity building is one of the major pillars of the NAIDP,” he said. “We have carried out training on vehicle conversion from PMS and diesel to CNG, as well as on electric vehicles.”
The council has also developed National Occupational Standards for EV maintenance and CNG retrofitting, with structured certification programmes expected to begin by 2026.
Local Innovation and Collaboration
Osanipin highlighted notable progress in local vehicle design, citing projects involving tricycles, buses, and electric campus shuttle buses developed in collaboration with 12 universities and private sector partners. “We want what is taught in our institutions to reflect industry realities,” he said. “Producing even a few world-class auto engineers locally will have a significant impact on the economy.”
Component manufacturing remains the real value driver in the automotive sector, with Nigeria spending more annually on tyres, brake pads, filters, and batteries than on importing complete vehicles. The council is engaging stakeholders to address infrastructure, financing, and policy bottlenecks facing component manufacturers, especially as Nigeria positions itself to benefit from the African Continental Free Trade Area.
Legislative and Public Engagement Efforts
Osanipin also revealed plans to transform the NAIDP from a policy document into an Act of Parliament. He announced that a draft Auto Industry Bill would soon be presented to the National Assembly. “Investment in the auto sector is huge,” he said. “They will need an Act.”
Acknowledging that some of the reforms would face resistance, Osanipin appealed to the media for support in explaining the policies to the public. “When the pushback comes, we need you to explain to Nigerians what we are trying to do and why,” he said, describing 2026 as a pivotal year for Nigeria’s automotive industry transformation.
