Nigeria’s auto industry bedeviled by policy inconsistency –Experts – Newtelegraph

 

•Pre-owned cars should be affordable to remove junks –Muda Yusuf

 

 

•I’ll make prices of new cars cheap –Innoson

 

•Importaton of pre-owned vehicles affecting new cars market –Ade-Ojo

 

T

hough the Federal Government recently suspended the auto policy, the recent realization that Nigerians spend about $8 billion yearly on imported vehicles, 90 per cent of that going into importation of fairly-used, known as ‘tokunbo’ in local parlance; is inspiring a fresh perspective in government and the public sectors of the economy.

 

 

This comes as the Nigerian Chamber of Commerce, Industries, Mines and Agriculture (NACCIMA) recently appointed the Chief Executive Officer of Innoson Vehicle Manufacturing Company, Chief Innocent Chukwuma as the Chairman of its committee against importation of toxic vehicles into Nigeria 

 

 

The new perspective in government and the private sector, experts say, would change the narrative of Nigeria being a dumping ground.

Speaking at the 19th Abuja Motor Fair, Vice President Yemi Osinbajo said that the government is fully committed to industrialization, adding that the government is also believed in the strategic and catalytic role of the automotive industry in the diversification of the Nigerian economy.

 

 

Osinbajo who was represented at the event by the Director General of the National Automotive Design and Development Council (NADDC), Jelani Aliyu said: “About $8 billion goes to overseas for importing vehicles while Nigerians are suffering, also most of the used vehicles imported are unsafe and not good for the citizens.’’

 

 

Used vehicles’ importation as setback for Nigeria

 

Against the backdrop of the outcry by automakers, car dealers and other industry stakeholders against the report resolve by China to flood Nigeria and other global markets with its used cars, the Director-General of NADDC, Jelani Aliyu has said that the importation of used vehicles into the country was a setback for the local auto market.

 

 

Aliyu, who spoke at a recent forum in Lagos, said the country could not keep importing used vehicles as it is hurting the economy.

He said: “Nigeria must develop its local auto industry like South Africa and India did. The government is committed to development of local auto industry.

 

 

“The government has trained 3,200 youths in mechatronics and has signed agreements with some auto companies to manufacture vehicles locally to create jobs for the youth.

 

 

“The trend of vehicle production must be reversed; more of these vehicles are assembled here in Nigeria.  Already production of vehicles is going on in Nigeria, but the government wants to see production on higher levels.”

Also speaking on the occasion, the Managing Director of Elizade Autoland, Demola Ade-Ojo has said that importation of ‘tokumbo’ vehicles is affecting the market for new brand cars in the country.

 

 

Ade-Ojo said there has to be a policy to make brand new vehicles available to Nigerians, and this should include a policy that will create a market for used vehicles that originate within Nigeria and not imported.

He said as long as used vehicles are imported into the country and prices of new vehicles remained high, new vehicles will never be able to compete favourably with imported used ones.

 

 

However, barring his mind on the Chinese government’s proposed plan, the Director-General, Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf said used cars are not under import prohibition list. He, therefore, urged the Federal Government to redefine the age limit and types of cars that could be brought imported into Nigeria.

“There are too many junks coming into the country and this poses safety risks. The government needs to redefine the age limit of cars coming into the country.

“Also, the import duty on used cars should be reduced to a maximum of 20 per cent so that people can afford newer models of used cars instead of going for junks. The market for rickety vehicles has become very huge because of the affordability challenge caused by high import duty,” he explained.

 

 

Innoson as head of NACCIMA auto committee against dumping of toxic vehicles

 

Chief Executive Officer of Innoson Vehicle Manufacturing, Ltd, Chief Innocent Chukwuma is to head the Automobile Committee of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) against dumping of obsolete and toxic vehicles into the country.

 

 

He said Innoson products are durable. They are as good as Japanese products, with Mitsubishi engine or some American products. He added that they are not yet purely a local technology, because the engines of the vehicles are still being imported from places like Japan and America.

 

 

According to him, Innoson vehicles have all the advantages of Made-in-Japan vehicles like fuel efficiency, warranty, no overheating, and environment-friendly.  Yet, the vehicles were built for Nigerian roads.

He said one of the advantages of buying Innoson products is that the owner of the vehicle can return the vehicles to the factory for refurbishment.  At the end of the day, your vehicle would come out almost as new. “Our raw materials are sourced locally, except the ones that cannot be got here.

 

 

“Our record, within just a decade, confirms this: Over 10,000 vehicles manufactured, over 7,000 human resources and markets covering over 25 African countries. Presently, the company has made in-road into some African countries such as Mali, Ghana, Sierra Leone, Chad, Niger, and Togo.

 

 

“When I see the first model of Innoson vehicle still plying the road, moving perfectly, it gives me joy. It shows that our brand is good.”

 

 

Chief Chukwuma said the inspiration to go into vehicle manufacturing was drawn from a desire to see Nigerians drive new cars because Nigeria has become a dumping ground for second-hand cars. Just like this company pioneered the manufacture of Made-in-Nigeria motorcycle and helped to end the dominance of tokunbo motorcycles, we have no doubt that it will also help us to drive tokunbo vehicles away from Nigeria. I am working to have a brand new car sold in Nigeria for about one million or a bit more. Did you see how tokunbo motorcycle got phased off? Is anybody talking about it anymore? The only thing it will take for tokunbo cars to go from Nigeria is to let the prices of new ones come down. Make new ones cheap and affordable; make the spare-parts available and tokunbo will disappear. Who will like to buy an old car when he or she can spend less and buy a new brand? I must make a new one be cheap so that tokunbo will go in the nearest future.

 

 

 

 

Viable vehicle financing critical to leapfrogging Nigeria auto industry – PwC report

 

 

Though Nigeria’s recession of 2016 impacted negatively on Nigeria’s automotive sector leading to a very slow growth scenario, the introduction of a viable vehicle financing scheme could instantly boost sales and ultimately local production. This is according to a new Industry brief on the sector released by leading professional services firm, PwC Nigeria.

 

The industry brief is a one-year-after follow up to the firm’s 2015 report on the sector in which it developed scenarios to capture the potential effects of the Nigeria Automotive Industry Development Plan (NAIDP) and in which it identified Nigeria as a future automotive hub driven by its large economy, population and government’s intent to revive the industry.

 

In the recently released Industry brief titled Africa’s Next Automotive Hub; Reality Check, PwC noted that Nigeria’s automotive industry prospects remain centered around proper and timely implementation of the NAIDP and the introduction of a viable vehicle financing scheme.

Dr. Andrew S. Nevin, Advisory Partner and Chief Economist, PwC Nigeria says: “Between 2014 and 2016, we saw prices doubling resulting in over 60 per cent decrease in vehicle sales. This can be attributed to the tariff regime coupled with the depreciation of the Naira. The auto industry like most other sectors relies heavily on imports for direct sales and assembly and even though cars and related components are not on the CBN’s forex 41 ban list, the difficulty of obtaining foreign exchange has led to increased prices and reduced consumer demand. In addition, we see Corporates who are usually the largest buyers reducing or postponing purchases while individuals on the other hand have seen a sharp drop in their disposable incomes and are thus reducing their demand for cars. All of these have led to very slow growth in the sector.”

 

 

The Industry brief observed that the introduction of the NAIDP (now being reviewed) has seen to increased activity in local vehicle assembly with the National Automotive Design and Development Council (NADDC) granting thirty five companies’ licenses to assemble/produce vehicles. Following this, several OEM representatives have begun plans to set up assembly operations to take advantage of the policy. Despite the increased number of local vehicle assemblers however, production has dropped by half due to the current economic climate. Assemblers are forced to source foreign exchange from the parallel market to pay for Semi-knocked down (SKD) kits. Limited players in the auxiliary industry keep local component content in production low and restricted to consumables. The reduced vehicle demand has seen assemblers operating below capacity (10 per cent -20 per cent).

 

 

Technology, the Industry brief notes, may be the game changer helping to leapfrog the industry into a more favourable scenario. This is in line with the global trend in the auto industry which is currently experiencing change spurred by disruptive technology.

 

 

Last line

 

 

As the implementation of the African Continental Free Trade Area (AfCFTA) which Nigeria signed in July at the AU summit in Niger, sets to commence in March 2020, BBC analysts, addressing that challenge Nigeria needs to address otherwise the other African countries will take better advantage of this free trade pact, said that as Nigeria imports over 90 per cent of the vehicles used in the country, it will therefore be market for South Africa, Morocco and even Kenya and Ghana.

 

 

They said: “Bringing down the tariffs on imported vehicles will enable other African countries to enter the free market and export cars to Nigeria.”

 

 

The analysts said with the exception of Innoson Motor Manufacturing Company at Nnewi, at the moment, Nigeria has only SKD assembling plants which are having difficulty surviving the import of cars (new and fairly-used) from Europe and Asia.

 

 

The BBC analysts concluded that for Nigeria to make money from export of cars in the AfCFTA regime, it needs to end importation of used vehicles, strike deals that will enable the country commence manufacturing g of cars and auto parts as soon as possible.

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