The federal government’s recent push to curb tyre imports and spur local manufacturing could falter due to the same structural issues that drove away major players like Michelin and Dunlop years ago.
The challenges then and now are familiar – inadequate infrastructure, high energy costs, influx of used and low-cost tyres and policy inconsistencies, among others.
Experts say the vacuum left by both Michelin and Dunlop had not been filled and the condition that made them leave Nigeria had not been addressed.
“Giants like Michelin and Dunlop were driven out by a perfect storm of volatile power grids that ruined production batches and a sudden tariff drop from 40 percent to 10 percent that made local manufacturing uncompetitive,” Oloruntoba Anate, CEO & co-founder of Automat Hub Ltd., told BusinessDay.
Anate warns that if longstanding structural challenges, such as high energy costs, policy inconsistency, and weak enforcement against imports, remain unresolved, efforts to revive local tyre manufacturing could mirror past failures that forced major producers out of the country.
“While there are some local players (forgo & starplus batteries), we currently don’t have the scale to meet total national demand for high-quality tires and specialised vehicle batteries if imports were cut off tomorrow,” Anate said.
He noted that building that kind of industrial capacity from raw material sourcing to specialised manufacturing plants is a three to six-year play minimum, provided the investment climate is right.
Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE), said boosting domestic tyre and battery production is a good idea but must be pursued strategically and sustainably.
Yusuf stressed that policymakers must first examine the structural and economic factors that led to the exit of previous manufacturers before considering import restrictions.
“In the past, we used to produce tyres. We had Michelin, we had Dunlop, we also produced batteries like Exide, but they all went under,” he said.
According to him, energy costs, logistics challenges, access to affordable financing, and raw material sourcing remain critical constraints that must be addressed to avoid repeating past mistakes.
Read also: Nigeria urged to ban tyre, battery imports to save N1trn
Influx of used and low-cost tyres compound issues
When these companies were still operating fully in the country, there were high influx of foreign products in Nigeria’s tyre markets. Today, the country still imports more, highlighting the high dominance of foreign goods competing with locally made ones.
In 2024, Nigeria spent $351 million on tyre importation, becoming the 50th largest importer out of 226 in the world, according to the Observatory of Economic Complexity (OEC) data, primarily importing from China ($302 million), India ($17 million), Thailand ($13.6 million), Japan ($5.49 million), and Germany ($1.56 million).
Data from the National Bureau of Statistics (NBS), in the same year, also showed that Nigeria imported N3.4 billion worth of plastic, rubber, and articles thereof – a key material in the production of tyres, indicating a 192.83 percent difference higher than the N186.4 billion exported in 2023.
Preference for fairly used tyres
In Nigeria, fairly used tyres are common due to their cheaper rate when compared to locally made tyres, as vehicle tyre retailers told BusinessDay that most people in the country buy foreign tyres, noting that locally made ones are not driving sales.
“I sell only foreign tyres and not Nigerian-made tyres, because locally made ones are not moving market,” Tobax Tyre and Rim said.
This indicates that Nigeria’s motorists may face high costs, as they rely on imported tyres, since local capacity does not meet demand.
“In the short term, restrictions would almost certainly trigger a price hike. When supply drops, and local alternatives can’t fill the gap, costs go up for every vehicle user. Since transport is the backbone of the Nigerian economy, you’d likely see a trickle-up effect.
“Higher logistics costs for goods, which leads to increased food prices and general inflation. For car owners, it could also lead to an influx of low-quality, refurbished alternatives, which brings up safety concerns,” Anate said.
He added that the high cost of new tires compared to ‘Tokunbo’ (used) imports remains a massive structural hurdle for local demand.
“For a real manufacturing resurgence, we need more than just import restrictions; we need specialised car-parts power zones and long-term FX stability for raw materials,” Oloruntoba said.
Yusuf added that policy should not be driven by emotions or sentiments, saying, “It has to be driven by evidence of sustainability and evidence that such restrictions will not impose additional burden on Nigerians.”
