Boston, MA -- (ReleaseWire) -- 05/05/2014 -- After a 5.5% drop in sales in 2012 (reflective of the tough macroeconomic environment during the year; the July 2012 flooding and ongoing violence in the country), BMI continues to forecast that the new vehicles market will post a strong rebound in 2013 and in 2014, when we forecast a 8.0% rise in sales, to 55,611 units.
The Nigerian economy is set to be one of the continent's strongest performers in 2014, when we expect headline real GDP growth to register 7.2%, up from an estimated 6.5% in 2013. We are forecasting that the Nigerian economy will expand by 7.0% in 2014, up from an estimated 6.7% in 2013 thanks to continued strong expansion in non-oil sectors. The positive impact of agriculture means that this important sector should contribute strongly to private consumption growth. Furthermore, coming in at 8.2% year-on-year (yo- y) in August 2013, inflation is at five-year lows and this will provide a boost to the purchasing power of Nigerian consumers.
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Meanwhile, there are signs that the Nigerian government is finally beginning to shoulder a serious role in encouraging - and protecting - domestic production. Nigeria's Federal Executive Council has approved a new Automotive Industrial Policy Development plan, aimed at addressing the shortcomings of previous policies and attracting investment in domestic production, in order to reduce the country's soaring vehicle import bill. Given the growth in vehicle imports in recent years, BMI believes the level of demand will gain the attention of major manufacturers, assuming the policy can be successfully implemented.
BMI believes that reverting to the old import tax regime will boost new and used imports into the country as they return to affordable levels for many Nigerians. Indeed, we may see a surge in cheap import volumes in the next few months as dealers and consumers seek to take advantage of this window of opportunity before the new tax regime is implemented.
Following the proposal of the new automotive policy (see 'Automotive Policy Seeks To Lure First Movers', October 4 2013), the Renault-Nissan Alliance has signalled its intention to be a 'first-mover' in the Nigerian production segment, as Nissan Motor has reached an assembly agreement with local distributor Stallion Group. Nissan has singled out Nigeria as a potential production hub for its African regional strategy.
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