There are hardly any stats on which car brands Nigerians use the most, but you don't need stats to know. Stand on any road in a major Nigerian city and you'll have your answer — Toyota.
However, it wasn't always Toyota. Nigeria's taste in automobiles has changed over the years.
In 2013, Professor Ohwojero Chamberlain from Delta State University published a paper titled History of Automobile Past and Present Challenges Facing Automobile Production in Nigeria. In the paper, Chamberlain's history of automobiles showed that the brands that ruled Nigerian streets were the likes of Peugeot and Volkswagen, and here's why.
In the 1970s, the Nigerian government issued a license of operation and control policy, which led to the creation of six automobile assembly plants in the country. The first plant was Peugeot Automobile Nigeria Limited (PAN) built in Kaduna in 1975 followed by Volkswagen of Nigeria Limited (VWON) in Lagos in 1978. By 1980, Anambra Motor Manufacturing Limited (ANAMMCO) was set up while Steyr Nigeria Limited Bauchi, National Truck Manufacturers (NTM) Kano Fiat Production, and LeyLand Nigeria Limited (LNL) were all built before 1980.
Nigeria had high hopes for these assembly plants. As a country, producing your own vehicles was a key to true industrialisation. It is also a great way to pass technical know-how to Nigerian citizens; however, these assemblies haven't fulfilled these hopes, yet.
One of the first reasons is the drop in oil prices that started in 1981. The oil boom of the 1970s that made Nigeria rich came to an end. This was caused by an increase in oil production, which caused oil-producing countries to begin looking for market share as there was more supply than demand.
Meanwhile, the automobile assemblers in Nigeria needed foreign exchange to import their supplies, but Nigeria didn't have it. The country had to start rationing imports.
The inability to import supplies meant vehicle production slowed down, which in turn meant a decline in profit for the assembly plants.
Volkswagen, for example, went from an annual production of 29,300 in 1981 to less than 1,000 in 1989 and in 2005. But oil wasn't the only culprit. Chamberlain's paper also pointed out other reasons why Nigeria's local automobile assembly is in its current state.
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For one, policies that were to help these assembly plants were poorly implemented.
One such policy from 1994 said, “government at all levels and their agencies must source all their vehicles from within the country, except where such Automobile is not available locally.”
This policy was created to increase patronage for locally assembled automobiles, but according to Chamberlain, even the government abandoned it and began importing cars.
Also, the government didn't pay much attention to the industry. Other reasons for the decline include high tariffs placed on buying new vehicles, Nigeria's declining economy, and most importantly, a lack of constant power supply — it was a huge pain for assembly plants to operate with inconsistent power.
Enter Toyota
Following the inability of local assembly plants to sustain production and offer price-friendly vehicles, Nigerians fulfilled their car ownership desires by buying used cars, aka Tokunbo.
Per PwC, there are 14 million cars on Nigerian roads, and the ratio of used to new cars is 75%:25%. Data from the National Bureau of Statistics (NBS) also reveals that Nigeria is the third-largest importer of used cars from the US after the United Arab Emirates (UAE) and China.
There's no data on which car brand is the most imported, but according to Business Day, the International Trade Administration (ITA) says the most preferred car brands are Toyota, Hyundai, and Kia.
The love for Toyota is not just a Nigerian thing. In 2023, Toyota was still the best-selling car brand in the world.
However, Toyota's car manufacturing prowess was borne out of a dire state of the Japanese economy that almost crippled its car manufacturing industry.
How Toyota did it
There are new big players in the global automobile industry today, but there's no denying that Toyota and the Japanese automobile industry are global leaders. But, like Nigeria, Japan could have been a nobody when it comes to automobiles, with the Second World War hurting its industries and Toyota almost shutting down.
The company, which was 12 years old by the end of the war in 1945, was facing one of its toughest challenges yet.
Five years after the war, Japan was still in an economic crisis; inflation was high, consumer patronage declined, and things got so bad that Toyota could not pay employees.
The company had to reduce its staff from 8,000 to 6,000 and even its president, Kiichiro Toyoda, and executives resigned.
Interestingly, these hardships represented a turning point for Toyota, one that would see it become the most-sold car brand globally. The executives went to the US to study how the likes of Ford did things.
This is where they got the idea for the Kanban system — a scheduling system for lean manufacturing — which made production more efficient. Toyota's success today was considered by some as impossible.
An article detailing Japan's rise and how it won the automobile industry says, "In the late 1950s and early 1960s, it was hard to see how Japan could rise to the top of the automotive world.
"Back then, Japanese car makers were known mainly for their habit of ripping off designs from other manufacturers. Toyota's first passenger car, the 1936 Model AA, was a blatant copy of Dodge and Chevrolet designs."
While Toyota copied designs, it improved its operations as a company. It created The Toyota Production System (TPS), which was fundamental to their success. The TPS is a manufacturing approach focused on ongoing improvement, streamlined processes, and minimising waste.
In 1957, Toyota established its headquarters in California, marking its entry into North America. The following year, the first Toyota vehicle was registered in the state. By 1975, Toyota had become the leading import brand in the United States, overtaking Volkswagen.
Toyota's success essentially came from studying all the best parts of leading automobile industries in the UK, US, and Germany and eliminating what they did badly.
For example, it found a way to fit Gemany's mechanical prowess into affordable everyday cars. It borrowed the US' superb marketing but paired it with cheaper cars and eliminated the electrical problems synonymous with UK cars.
Design was not one of Toyota's strong suits early on, but it didn't matter because it created affordable and reliable cars.
This reliability is one of the major reasons it conquered Nigerian roads. They are also known to have better repairability and fuel efficiency. But there's a new contender for Japan's top spot in Nigeria and probably even globally.
Enter China
Like Japan, China’s car manufacturing journey has been marked by imitation but also by grit, innovation, strategy, and adaptation. The Chinese car industry was initially insignificant, with the government prioritising heavy industry over consumer vehicles.
Things changed in the 1980s when China opened its doors to joint ventures with foreign car makers like Volkswagen and General Motors. These partnerships taught Chinese manufacturers the ropes, leading to the emergence of homegrown brands in the 90s.
While local car brands still had a reputation for being cheap knock-offs, this era was crucial for establishing a foundation and beginning to understand what would resonate with local buyers.
Yet, building a trusted reputation domestically and globally was no walk in the park. In the early 2000s, most Chinese brands were criticised for their low quality and unreliability.
Vehicles would often fail quality tests abroad, making it tough for them to compete against the likes of Toyota or Ford.
Recognising these issues, companies like BYD and Geely doubled down on research and quality control, much like Toyota had done decades earlier. Geely even acquired Volvo, a European luxury brand, as a way to gain expertise and improve its image.
This period mirrored Japan's post-WWII era, when its car makers, especially Toyota, were viewed as subpar until they adopted strict quality improvement programmes and steadily rose to prominence.
China’s approach was also fuelled by a global shift towards electric vehicles (EVs), giving Chinese car makers a unique advantage. In the early 2000s, when many car giants were still perfecting internal combustion engines, China began investing heavily in EV technology, setting its sights on becoming a leader in this new market.
Like Toyota’s pivot to hybrid technology, China positioned itself to ride the wave of global interest in cleaner transportation.
Brands like BYD and NIO took the lead, allowing China to catch up to the global market and also set trends in EVs — a testament to its ability to adapt to market shifts, much like Japan did when it focused on fuel efficiency and reliability.
China and Japan both employed smart tactics to overcome initial hurdles and dominate the global car industry, but China is yet to dominate Nigeria.
Unsurprisingly, China has a plan that has been largely successful. Speaking with Techpoint Africa, Soumobroto Ganguly, former Cars45 CEO and Chairman, points to China's strategy to take over Nigeria's automotive market: "They started with commercial vehicles."
The Sinotruk Howo Trucks (aka Dangote trucks) and the Yutong Bus, which the Lagos State Government wants to use for transportation, are Chinese.
Likewise, the the $260 million the Lagos State Government plans to spend on expanding its LagRide fleet, is going to be spent on Chinese car maker, GAC. However, the passenger car market still eludes the Chinese car manufacturers; but for how long?
Can China dethrone Japan in Nigeria?
Japan has the Nigerian automobile market locked, but the Chinese cars are creeping in, creating their lane on Nigerian roads.
Already, China is the largest car maker in the world accounting for over 23.6 million units sold in 2022. Japan and India are the second and third largest car markets in the world, with sales of 5.9 million and 3.3 million units, respectively.
Per news reports, competition among Chinese brands in Nigeria is increasing. From GAC to Cherry, to Changan, these brands are vying for a piece of the Nigerian market. But do they stand a chance?
Ganguly says no because "Brand perception for people is very high when it comes to automobiles."
In Nigeria, buying a car is a sign of success, but the kind of car you buy determines how successful you are. A Toyota, for example, shows you're doing well, but a Mercedes Benz shows you're doing really well.
In Ganguly's opinion, Nigerians don't have a brand perception of Chinese brands yet, and he estimates it could take them at least 20 years to get to the point where Toyota and other European cars like Mercedes are now.
A report by Jato Dynamic, a company that provides data on the automotive industry, says perception is still an issue for Chinese car brands, especially when it comes to entering developed markets.
For example, Chinese brands grew their market share in developing economies from 4.79% in 2021, to 6.46% in 2022; in developing ones, it grew from 0.67% to 1.57% in the same time.
Ganguly admits that when it comes to new cars, the Chinese cars are starting to increase market share, but for used cars, which he says make up 90% of Nigeria's automobile market, the Japanese cars — especially Toyota — have a huge chunk of the market.
But Femi Oriowo, CEO of Carbin Africa — a company that aggregates car prices and other relevant data across different car dealers in Lagos — feels Chinese car makers can get a significant market share of the used car market in ten years.
Before becoming a startup founder, Oriowo was a car dealer, and he opines that securing the new car market was a step towards securing the used car market.
Based on what he has noticed, corporate bodies now opt for Chinese brands because they are about 40% cheaper than new European or Japanese cars. He believes this influx of new Chinese cars will find its way into the used car market.
He says corporate organisations often let go of cars after three or four years and sell them into Nigeria's used car market.
This increases the likelihood of Chinese cars entering the used car market, but Ganguly highlights another problem — resale value, something Nigerians consider before buying a vehicle.
Although he can vouch for Toyota's resale value, he can't do the same for Chinese brands as "we've not seen how they hold up after eight to ten years."
According to Sola Adigun, Managing Director of Carloha Nigeria — a major distributor of Chinese car brand, Cherry — aftersales service is the key to the heart of Nigerians who buy cars.
This is precisely why Carloha Global CEO, Liang Long, says they give a six-year warranty and offer six years of free service. Carloha also ensures that repairs are done in less than a week. And if they can't finish in that time, the customer gets a car to use until the work is done.
This is the third strategy for Chinese domination, according to Ganguly. Unlike Toyota, Chinese car manufacturers have deep-pocketed distributors.
These distributors offer car financing services and aftersales services that car manufacturers from other countries can't match. Ganguly describes these strategies as "very determined."
These determinations are also backed by the government. Adigun tells me that they've struck partnerships with the government that ensure when they import SKD (Semi Knocked-Down) parts, to be assembled in Nigeria, they pay 10% duties, but for CKD (Completely Knocked-Down), they pay 0% duties.
What do Chinese car users say?
From all indications, China has a great recipe for market domination, but people who actually use these cars tell a different story.
Olajire is a LagRide driver who drives one of the 1,000 GAC SUVs and Sedans the Lagos State Government bought to create a fleet of state-owned e-hailing companies.
“I’ve driven different types of used vehicles, Ford, Toyota and even Nissan, and their performance is on par with the [new] GAC,” Olajire says.
He doesn't believe a new GAC should need fixing as often as a 15-year-old Toyota, but he has had to take his GAC in for frequent repairs.
Another LagRide driver, Chris, agrees.
“If you buy a brand new Toyota, you’re assured of zero repairs for at least five years. But I’ve spent so much on this new GAC already.”I found my way into LagRide's WhatsApp group, and not one driver sang the car’s praises.
However, Oriowo can vouch for the quality of Chinese cars especially the progress they’ve made with EVs.
“After five years of using a Chinese EV, it is still capable of retaining over 80% of its battery capacity. That's to tell you the kind of technical efficiency and durability that Chinese manufacturers are building into their products.”
Ganguly doesn’t dispute the efficiency of Chinese cars. He actually thinks they’ve done well to offer their cars at low prices, but he insists brand perspective is an issue.
Long and Adigun admit this, and it is something they’re working on, with Carloha spending a lot on marketing and communication. But they have something that beats branding.
“If you sell the benefit, you can change customer attitude,” and in a country where car prices keep climbing, Adigun believes price is still a major selling point.
China looks like it is on its way to dominate Africa's largest car market, but only time will tell whether Nigerians care more about price than brand.