Recently, Carmudi, the largest online car market in Nigeria released a report on the emerging trends in the automobile industry. The report which examined the current and future state of the automotive industry in Nigeria and other emerging markets is titled: ‘The Booming Automotive Industry in Emerging Markets.’ It provides an insight into the state of automotive sales in the world and how car purchasing behaviors have changed due to the drastic increase in internet and mobile penetration, rising GDP, and the emergence of a middle class. According to Christian Keller, the managing director, of Carmudi Nigeria, the findings in the report are the results of the company’s the quantitative surveys conducted online with both car buyers and car dealers, and in-depth interviews with industry influencers throughout Nigeria.
State of Global Car Sales
According to the report, global automotive sales for 2015 are expected to reach close to $89M, a 2.4 percent growth from 2014. Emerging markets’ share of global sales will rise from 50 percent in 2012 to 60 percent by 2020, while their share of global profits is also set to rise by 10 percent. When it comes to new cars, purchase intent is strongest in Asia, where 65 percent of respondents say they will buy new cars in the next two years, compared with seven percent who plan to buy used cars.
Growth of Auto E-Commerce
Globally, auto E-Commerce has grown at such a staggering rate that now as many as 80 percent of new car customers and almost 100 percent of used car customers begin their car shopping experience online. With internet and mobile penetration significantly growing in emerging markets, the rate of moving the car shopping experience online is beginning to mirror that of Western Markets. In Nigeria, the biggest source of the new middle class in Africa, 83 percent of car buyers report using the internet to conduct research on a car before making a purchase.
Changes in Nigeria Car Sales
The Carmudi study found that 30 percent of car dealers in Nigeria reported an increase in car sales over the past twelve months due to the changing economic climate, while 50 percent of car dealers surveyed reported a decrease. According to the report, Nigeria’s auto industry remains relatively strong, but critical policy changes, like the National Automotive Industry Development Plan, have the potential to change the entire industry.
The Shift to online
83 percent of Nigerian car buyers reported turning to the internet, blogs, forums, and social media when researching cars. The majority of Car Dealers responded that up to 80 percent of their customers turn to the internet and social media for auto research. The responses also proved that offline media, including newspaper classifieds and auto expos (under 10 percent), are declining as a source for buyers. Nigerian car dealers are also getting more and more digital when advertising their listings. Around 80 percent of car dealers are now primarily focused on advertising their car listings online. William Anumudu, CEO of Globe Motors said currently, the number of people turning to the internet to for car purchases has been on the increase. He explained that a lot of people use the internet to search for information, products or services. “Any business that wants to excel must go digital. This is due to the fact that Nigerians like to be associated with new trends, the internet accessibility anywhere and the fact that information is at their fingertips,” he said.
The Future of Car Sales
The findings of the report further indicate that Nigeria has been heavily dependent on auto imports, which accounts for the largest share of the country’s foreign reserves each year. New vehicle assembly plants are expected, and the number of imported cars has already declined significantly – from 11,563 in January to 7,400 units in February. According to the report, last month’s historic election of Muhammadu Buhari as the President of Nigeria has created uncertainty surrounding the autos sector. This is because Buhari could choose to reverse all or some sections of the automotive policy introduced by President Goodluck Jonathn to secure more support from stakeholders. Keller said: “2015 is the year of online car sales in Nigeria. With an unmatched growth rate in online car searches in Nigeria and a rapidly growing middle class, Carmudi´s report affirms that our investments to become the No. 1 online car marketplace in Nigeria were worth it.”
By Pita Ochai