Industry Trend Analysis - Easing Macroeconomic Headwinds To Support Recovery In Sales - FEB 2018

BMI View : New vehicle sales in Nigeria will grow 2.8 % in 2018 as the country's continuing econom ic recovery, improving access to foreign currency and drop in inflation and interest rates help to bolster consumer spending.

We forecast new vehicle sales in Nigeria to rise 2.8% in 2018, reaching close to 10,000 units, marking a recovery after three years of sales declines. Auto sales in Nigeria have dropped drastically over the last few years (falling 48% y-o-y in the first nine months of 2017) as an economic downturn caused by the collapse in global oil prices, a scarcity of foreign exchange, elevated inflationary pressures and high interest rates eroded consumer purchasing power ( see ' Vehicle Sales To Fall Despite Economic Recovery ' , December 15 2016). As economic growth accelerates, and the mentioned headwinds subside, we expect to see consumption in Nigeria pick up, which will aid the recovery in the country's autos market.

Our Country Risk team expects economic growth in Nigeria to accelerate in the years ahead, with forecast real GDP growth of 3.0% and 3.5% in 2018 and 2019 respectively, up from a projected 0.9% in 2017, on the back of an improving outlook for the country's dominant hydrocarbons industry, which we believe will benefit from both rising crude oil prices and increasing output ( see ' Ongoing Recovery Remains Susceptible To Downside Risk ' , October 27). We expect this brighter economic outlook to help drive up consumer and business spending as confidence and sentiment recovers.

Vehicle Sales To Begin Gradual Recovery
Nigeria - Vehicle Sales, Units
e/f = BMI estimate/forecast. Source: Nigeria Customs Service, Local Car Makers, BMI

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