Nigeria tire market is
expected to be driven by several
factors, such as growing demand for two-wheelers, and infrastructural projects
in construction, logistics, oil, and gas sectors led by both the government and
private players, during the forecast period.
Nigeria Tire Market Scope
The term “tire” refers
to a ring-shaped component of a vehicle that surrounds the wheel rim to
transfer weight from the axle through the wheel to the ground and provides
traction on the surface over which the wheel moves. Tires are extensively used in
the automotive industry. The tire market is classified based on various categories,
vehicle type, demand category market, construction type, tube type, and region.
Based on vehicle type,
tires are divided among passenger cars, light commercial vehicles, medium &
Heavy commercial vehicles, two-wheelers, and off road vehicles (OTR). Tires are
manufactured in two categories, based on which, they are segmented into radials
and biases. Tires can be rebuilt or repaired from the old tire by treading onto
it. This divides the market into two parts i.e., either original equipment
manufacturers (OEM) or aftermarket (replacement). Further, the tire market is
also divided if the tire is tubeless or contains a tube in it.
Nigeria Tire Market Overview
The Nigeria tire market
is experiencing growth in the last few years due to several key factors driving
the market growth, such as a rise in two-wheelers demand, and government
initiatives regarding construction and logistics sectors in the country. Also,
Nigeria has an abundant source of oil and gas and it has been attracting
investments from several countries. This creates opportunities for truck supply
and oil shipments, which directly influences the tire market.
Moreover, the increase
in the import of passenger cars in the country is driving the replacement tire
market. However, imported cars are quite expensive, due to which, people are
shifting toward used cars which nonetheless also helps the tire market.
Nigeria Tire Market Drivers
The demand for tires in
Nigeria is driven by the demand for two-wheelers in the country. The
two-wheeler market in Nigeria captures a significant automotive market. Despite
the ban on two-wheelers in some of the major cities in the country due to
various crimes that are related to their usage, demand for the two-wheelers is
still increasing. Their growing demand is also attributed to their high fuel
efficiency and easy maneuverability. Over the past few years, the import of
motorcycles has been significantly driven by rising urbanization, increasing
youth population, and increasing business activities. The import of
two-wheelers has also led to an increase in logistics services at a smaller
scale in several cities in Nigeria.
The tire market is also
linked with the construction sector due to its involvement with commercial
vehicles. The construction projects in Nigeria are financed by the government,
public-private partnerships (PPPs), multilateral development banks, and several
other entities. The Nigerian government has recently taken an external loan to
develop the infrastructure of the country. This has developed the demand in
subsectors associated, such as construction equipment and building materials.
The demand for dump trucks, dredgers, excavators, and other such vehicles, is
rising significantly, fueling the demand for tires in commercial vehicles and
Nigeria has abundant
sources of oil and gas reserves, and the government is now taking steps to
attract investors to exploit the resources for extraction and production. This offers
opportunities for the supply and services sectors as well. Within the oil
sector, downstream sectors are benefiting the tire industry since downstream
subsectors mostly involve the logistics companies, which are involved in the
transportation of fuel and service stations. This is increasing the demand for
medium and heavy commercial vehicles in the oil sector, which is further
dependent upon the tire industry.
Nigeria Tire Market Trends
The demand for
replacement tires is rising in Nigeria due to several reasons. Nigeria mostly
consists of middle-class and lower-class income people. The price of automobiles
is increasing continuously in Nigeria due to high import duties and taxes. The
higher price of vehicles is shifting people’s preferences to own a used vehicle
instead of a new vehicle. The used vehicle’s tire damages at a faster rate than
a newer one, therefore, requiring early tire replacements. Moreover, the road
infrastructure of Nigeria consists of mostly rough terrains which drastically
decreases the life of a tire.
There is an increase in
new local manufacturers and assemblers in the country due to higher vehicle
prices. The government has taken some initiatives to boost local manufacturing to
decrease vehicle prices in the country. In 2021, the National Automotive Design
and Development Council (NADDC) in collaboration with Stallion Group unveiled
the locally manufactured electric car in Nigeria. All these developments are
dependent on auxiliary industries, such as tires, belts, and lights. Therefore,
improvement in the automotive industry in Nigeria is directly leading to growth
in the tire market.
Nigeria Tire Market Challenges
Poor infrastructure is
one of the major challenges for the tire market in Nigeria. There are very few
vehicle assembly plants operational as compared to the number of licensed
plants. And among those who are operational, they are operating and producing
at very low capacity due to forex challenges, infrastructure, electricity
deficiency, and capacity gaps. This has led to several automakers shifting
their plants to nearby countries and exporting from there. The disruption in
this whole manufacturing chain is dampening the tire industries in Nigeria.
government policies and corruption in the whole system has always been the
challenge for tire companies operating in Nigeria. Manufacturing tires in
Nigeria is quite difficult to carry out given the poor infrastructure and
resources for it. The automotive market already depends heavily on importation.
Many times, the Nigerian government has slashed duty on tire import thereby
increasing the influx of tires into the country. This has resulted in the
shutdown of local manufacturing plants due to cost competitiveness as they were
already struggling with a poor support system.
Nigeria Tire Market Opportunities
Despite several hurdles
in Nigeria toward manufacturing and running a business, the country presents itself
with some untapped opportunities for the tire market. The two-wheeler market
has been increasing continuously, owing to their versatility on the poor road
infra in the country. They have been in demand even though they are banned in
some of the major cities.
Many companies have
recognized an active market in Nigeria that requires some specific conditions,
such as tire pressure monitoring indicator which will help in preventing
deflation and puncture over rough terrains. Therefore, there is also space for
development and innovation in the country’s tire market. Apart from this, there
is also an increasing market for used vehicles, which is creating opportunities
for replacement tires in the country.
Moreover, the logistics
and supply chain sectors are among the fastest-growing sectors in the country.
This is due to the government's investments in the infrastructural development
of railways, airways, manufacturing, and exports, and a rise in e-commerce
activities is also observed in the last few years. Extraction and production
from the oil and gas sector are also rising in the country, which further
creates opportunities for logistics and supply chains. All these developments
are creating demand for commercial vehicles which depends upon the tire
industry. Therefore, there is a huge demand for tires that are used in