The automobile industry in Nigeria appears to be undergoing a revolution, judging by recent plans of the Federal Government for the massive roll out of ‘made in Nigeria’ locally assembled vehicles, before the end of 2014, under the new automotive policy. The new auto policy has generated mixed reactions from analysts and stake holders in the industry. While some have argued that its implementation is hasty, the new auto policy has been described by many as noble in vision and a significant milestone in the history of the country’s evolving automotive industry. It is expected that the policy will engender a drastic reduction in the prices of brand new locally made vehicles and make them affordable to Nigerians. In furtherance of the new policy, import duty on fully built [FBU] new, as well as used cars, was increased from 22 per cent to 70 per cent, while a zero per cent duty was placed on imported Completely Knocked Down [CKD] units. Prior to the introduction of the auto policy, prices of new vehicles were prohibitively high such that they were beyond the reach of most Nigerians, especially the middle class. Resultantly, many Nigerians inevitably resorted to imported used cars, popularly referred to as “Tokunbo”. It must be realized that the importation of fully built vehicles [FBU’s] – whether brand new or used – over the years, has had deleterious effect on the nation’s foreign exchange resources.
Moreover, the use of imported used vehicles, apart from constituting environmental and public health hazards, in my view, is also humanly degrading to Nigerians. The Federal government should, therefore, be commended, rather than being unduly castigated by a few entrenched, vested interests, for initiating this laudable policy which is principally aimed at encouraging the local production of vehicles. I believe that by the time the several auto manufacturing/ assembly plants fully come on stream to roll out their products the stiff competition that will follow will lead to further reduction in prices, thereby giving Nigerians “a break from the stranglehold of wholesale vehicle importers” and used “Tokunbo” cars.
I recall those years of yore [in the 1970’s] when we had functioning auto assembly plants all over the country, [VON in Lagos, PAN, Kaduna, Leyland, Ibadan, Nisan and Steyr, Bauchi, ANAMMCO, Enugu, among others] locally assembled brand new cars such as Volkswagen, Peugeot and Nissan models, depending on the brand capacity, were affordably priced, ranging between N3, 000 and N8, 000 [which is less than the cost of a tyre now]! With the new auto policy, I envisage that better days are coming back soon!! In order to complement the auto policy and make the locally produced brand new cars affordable to Nigerians, the Federal government is planning to launch a car financing scheme involving both local and international banks by November this year. Under the proposed financing scheme, interested Nigerians will be empowered to buy the new cars assembled in Nigeria at an interest rate of not more than 10 per cent repayable over a period of four years.
I believe that with sustained commitment and faithful implementation by the government, the new auto policy will chart a new path for the automobile industry in particular and industrial growth and development of the economy in general. In particular, the policy will rejuvenate the automobile industry with a positive spin off on creating employment opportunities for teeming unemployed Nigerians. The local manufacturing/assembly of vehicles will also stimulate and encourage the production and supply [as against the usual importation] of local inputs, parts and components required in the automobile industry and related sectors of the economy, thereby adding value to the industrial chain. It is heartwarming and encouraging that the new auto policy has started yielding the desired dividends, as a number of foreign automobile manufacturers [at least 12, at the last count] have reportedly signified interest, under joint venture arrangements, to either resuscitate, retool or set up new vehicle assembly plants and spare parts plants in Nigeria, so as to give a new lease of life to the nation’s moribund auto/transportation industry. Recently, it was reported that Pan Nigeria revived its moribund assembly plant in the country with the inauguration of Peugeot 301 production line in its Kaduna factory. It is expected that many more joint venture arrangements and investments in the sector will follow suit, as the auto policy begins to take proper shape in terms of its implementation. When fully operational, it is projected that the nation’s automobile assembly plants will roll out a combined aggregate of 300,000 vehicles within the next two years. While some critics have said that this projection is unrealistic, I wish to say that, albeit a tall order and unattainable as it appears, with relevant structures, institutional capacity and an enabling environment in place, it is not impossible to achieve. I, therefore, enjoin all stakeholders to embrace and support the new auto policy for it to achieve the desired, beneficial results.
KAYODE OLUWA
