Dangote Refinery, lower inflation to lift Nigeria’s new vehicle sales by 7.6% in 2026 – Report

Improved fuel supply from the Dangote Petroleum Refinery, moderating inflation and government incentives are expected to keep Nigeria’s automotive market on a growth path, with new vehicle sales forecast to rise by 7.6 per cent in 2026 after a strong rebound in 2025.

This was disclosed in a BMI Report, which forecast that the growth will follow an estimated 20 per cent increase in new vehicle sales in 2025, with the full operation of the Dangote Petroleum Refinery, moderating inflation and incentives for electric vehicles (EVs) expected to provide the biggest boost to demand.

BMI, however, warned that geopolitical tensions, exchange rate pressures and the continued dominance of Nigeria’s used-vehicle market could slow the pace of expansion.

According to the report, the Dangote Refinery’s attainment of its full processing capacity of 650,000 barrels per day in February 2026 is expected to improve domestic fuel availability, reduce dependence on imported petroleum products and provide support for the naira.

“We forecast new vehicle sales in Nigeria to rise by 7.6 per cent in 2026, following a 20.0 per cent increase in 2025. The continued ramp-up of the Dangote refinery, which reached full capacity of 650,000 barrels per day in February 2026, is a key supporting factor, with enhanced local fuel supply reducing import dependency and supporting the naira,” BMI stated.

The research firm also cited easing inflation as another major factor expected to improve vehicle demand. Nigeria’s annual inflation slowed to 15.1 per cent in February 2026, its lowest level since November 2020, marking the eleventh consecutive month of declining inflation.

According to BMI, lower inflation is likely to improve household purchasing power, enabling consumers to spend more on discretionary items such as new vehicles.

Despite the positive outlook, the report cautioned that renewed depreciation of the naira later in the year could offset some of the gains by raising the cost of imported vehicles and automotive components.

Beyond 2026, BMI projects Nigeria’s automotive market to expand at a compound annual growth rate (CAGR) of 6.4 per cent between 2026 and 2032, supported by rising demand for personal mobility, expanding logistics and transportation services, and government initiatives to encourage local vehicle production.

The report also expects Nigeria’s electric vehicle market to outpace the broader automotive sector in 2026.

BMI attributed the anticipated growth to higher petrol prices following the removal of fuel subsidy, increasing private investment in EV charging infrastructure and government incentives aimed at accelerating adoption.

It noted that recent reductions in import duties on fully built electric vehicles, alongside the Federal Government’s target of achieving 30 per cent local EV production by 2033, could further stimulate demand.

The report added that Nigeria’s abundant natural gas reserves present significant opportunities for compressed natural gas (CNG) vehicles, which could reduce reliance on imported fuel while lowering transportation costs for motorists.

Despite Nigeria’s positive outlook, BMI downgraded its forecast for the wider Sub-Saharan African automotive market.

The research firm now expects regional vehicle sales to grow by just 1.9 per cent in 2026 to about 1.2 million units, compared with its earlier projection of 4.4 per cent growth.

It attributed the downgrade to geopolitical uncertainties, particularly tensions involving Iran, which could increase global fuel prices, raise shipping costs and further pressure vehicle import prices across the region.

“Sub-Saharan African consumers are highly price sensitive. The region’s heavy reliance on imported vehicles and automotive components leaves it particularly exposed,” the report noted.

BMI also warned that disruptions in global supply chains for key automotive materials such as aluminium and plastics could affect vehicle production and pricing.

The report observed that local vehicle manufacturing in Nigeria still accounts for less than 20 per cent of total vehicle sales, with imported used vehicles continuing to dominate the market.Although the Federal Government’s 2026 Fiscal Policy Measures introduced tariff reductions on selected vehicle imports to ease inflationary pressures, industry stakeholders have expressed concerns that lower import duties could weaken local assembly operations.

BMI identified the pending passage of the National Automotive Industry Development Plan (NAIDP) Act as another critical policy issue for the sector.

The report, however, described the signing of the African Continental Free Trade Area (AfCFTA) Rules of Origin for automotive products in February 2026 as a positive step that could encourage greater intra-African trade, increase localisation of automotive suppliers and support long-term investment across the continent.

Africa’s vehicle production is forecast to rise by 6.4 per cent to about 1.5 million units in 2026, although the biggest gains are expected in established manufacturing hubs such as South Africa and Morocco, while countries including Kenya and Ghana are likely to focus on component manufacturing and sub-assembly.

BMI also expects electric vehicle adoption to improve across Sub-Saharan Africa, supported by the arrival of lower-cost models from Chinese manufacturers, including BYD, Chery and Great Wall Motor. Some EV models are now priced below $15,000, making them more affordable for consumers.

Country-specific forecasts show Nigeria leading growth with a projected 7.6 per cent increase in vehicle sales in 2026, while Angola is expected to record a six per cent rise. In contrast, South Africa’s vehicle sales are forecast to decline by 1.6 per cent amid weaker consumer demand and higher fuel costs.