Russia’s biggest automaker, AvtoVAZ, is making a bold move into Nigeria as part of its strategy to expand beyond its home turf.

The company, which is mostly owned by the Russian government, has its sights set on the Lekki Free Trade Zone in Lagos, where it plans to set up a spare parts hub and service center before the end of 2025. This marks its most ambitious effort yet in West Africa’s largest economy.

But AvtoVAZ isn’t stopping there. The automaker is also in talks with the Nigerian government to establish a local assembly plant, a move that could strengthen its foothold in a market where most car buyers opt for used vehicles over new ones.

The company’s push into Nigeria comes at a time when competition is heating up back home. Chinese automakers have been expanding their footprint in Russia, with Great Wall Motors planning to increase production from 150,000 to 200,000 units by 2025. At the same time, major players like Hyundai and Renault are reportedly eyeing a return to Russia once a ceasefire in the ongoing conflict with Ukraine is secured.

Looking for fresh opportunities, AvtoVAZ sees Nigeria’s auto industry as an untapped goldmine. Demand for vehicles in the country is huge—about 720,000 units per year—but local production only accounts for a tiny fraction of that, around 14,000 units annually.

One area where AvtoVAZ hopes to make an impact is Nigeria’s growing interest in alternative fuel vehicles. The company plans to partner with a Russian engineering firm to set up a compressed natural gas (CNG) conversion plant. This will allow Lada cars to come with factory-fitted or locally converted gas-powered engines.

“If you bring CNG cars to Nigeria, you don’t pay any duties, which is why we are in talks with the relevant agencies,” said Adewole Opeyemi, AvtoVAZ’s official representative in Nigeria. “Some Lada cars will arrive with factory-fitted gas-powered engines, while others will be converted locally by Russian specialists.”

AvtoVAZ, known for its Lada brand of budget-friendly cars, SUVs, and commercial vehicles, has been doing business in Africa since 1999. Over the years, it has shipped around 100,000 cars to the continent, with its first major partnership being in Egypt, where Lada models were assembled at a local Suzuki plant.

In 2022, the company announced plans to export 20,000 vehicles in 2023, with a strong focus on the African market. Since then, it has been working on reestablishing itself on the continent, with Ethiopia emerging as a key destination. In 2023, AvtoVAZ signed a letter of intent with Ethio Engineering Group to begin local production of Lada vehicles.

“We are witnessing a new wave of diplomatic cooperation between Russia and African countries. Nigeria, as the region’s biggest market, simply cannot be overlooked,” said Artem Aglichev, AvtoVAZ’s Head of Product Marketing. “Opportunities are opening up for us, and we’re ready to explore them.”

Despite Nigeria’s potential, the local auto industry is still largely dependent on imports, particularly second-hand vehicles. Domestic manufacturers like Innoson Vehicle Manufacturing, Peugeot Automobile Nigeria (PAN), Coscharis Motors, and GAC Motors operate in the market, but foreign brands still dominate. Toyota leads the pack with a 16.1% market share, largely due to its reputation for reliability and easy-to-find spare parts. Japanese brands like Toyota and Honda control nearly a third of the market, while Hyundai and Kia have gained traction with stylish designs and competitive pricing.

“As a state-owned company, we fully understand the regulatory requirements and are committed to local assembly,” Aglichev added. “Nigeria has been a strong player in this field since the 1950s, with skilled labor, logistical capabilities, and economic feasibility. This is a logical and reasonable step, and we are confidently moving forward.”

Still, AvtoVAZ faces significant challenges. Navigating Nigeria’s regulatory landscape won’t be easy, and breaking into a market dominated by used cars and well-established brands will take time. The big question is whether Lada’s low-cost models can win over Nigerian buyers who are accustomed to pre-owned imports.