Manufacturers Promise To Fill Vacuum As Vehicle Import Drops

THE Nigerian Market for fairly used vehicles, also known as Tokunbo, is gradually diminishing with the gradual implementation of the National Automobile Policy. The policy increased tariff on the imported motor products by 100 per cent.

Although, fairly used cars are still on display at various auto shops across the country, investigations revealed that importation of the auto products has drastically reduced, especially since the beginning of the year.

Car manufacturers said they were at home with the development, saying the implementation of the nation’s auto policy was capable of putting the country on the path of industrial revolution, with their installed capacity, as they have concluded plans to fill the vacuum if given the enabling environment

Statistics from Seaport Terminal Operators Association of Nigeria indicated that vehicles importation through the Lagos ports reduced by more than 150 per cent in January this year, compared to the same period of last year.

In specific terms, only about 8,000 vehicle (cars) were discharged at Lagos Ports in January this year, against 27,000 units that were discharged at the same ports in 2014.

The volume of trucks that were imported through the gateways within the same period under review also indicated a sharp reduction as only 1,700 units came into the country through the ports in January this year, a drop of 1,000 units of the 2,700 units that came through the Lagos ports in January, 2014.

‘‘It must be noted that in the first half of 2014, the volume of vehicles imported was extremely high, in anticipation of the introduction of the new duty regime. The Average number of cars and vans that were brought into the country in the previous years was in the range of 20,000 units per month,”

our source at the terminal operators association said few days ago when he gave the probable reason for the wide gap between the import of the products in the two years under review.

The reduction, he said, is as a result of the implementation of the National Automotive Policy, which raised tariff on auto products from 35 to 75 per cent. The policy was fashioned out to encourage local production of vehicles.

Under the policy, the Federal Government approved a New Automotive Industry Development Plan (NAIDP), which is aimed at transforming the Nigerian automotive industry so that it can attract investment into the sector, which is a key component of the Nigerian Industrial Revelation Plan (NIRP).

The NIRP is a 5five -year programme developed by the Federal Ministry of Industry, Trade and Investments to diversify Nigeria’s economy, increase the country’s revenues through industry and to increase manufacturing sector’s contribution to Gross Domestic Product from four per cent to six per cent by the end of this year and finally above 10 per cent by 2017.

The National Automotive Industrial Development Plan elaborately addresses the supply side in the sector, by making provision for the establishment of Automobile purchase scheme to drive the demand side, which is equally critical for its success.

Perhaps, it is this provision that empowered the National Automotive Council to put in place a scheme that would enable Nigerians to own a brown new car when the window is finally closed for the influx of Tokunbo vehicles later in the year.
The Director General of the Council, Aminu Jalal had told The Guardian that his organisation had signed an MOU with a South Africa based bank to be located in Nigeria to give to Nigerians loan facility that would enable them purchase products from the emerging auto firms in the country at low interest rate

‘‘They have already recruited people and have also rented offices and there are people already doing the ground work for them. The challenge of the Ebola virus last year prevented them from coming, but we are hoping that by April (next month) they would be able to roll out. We have signed MoU with the bank and there are people working on the take-off now. Nigerians would be able to access loans at a reasonable lending rate, but we want to start with the formal sector.”

The Managing Director of Volkswagen automobile company, Tokunbo Aromolaran attributed the decline in vehicle import to the panic importation by importers last year, adding that they had stockpiled their warehouses with the products in anticipation of the auto policy implementation this year.

‘‘The decline in vehicle import is a welcome development, but the major reason is that there is a glut of the products in the Nigerian market. The failure of the government to implement the policy as announced last year created room for massive importation, causing glut. The government is not bold enough to implement the policy. Many of the importers shipped into the country many vehicles last year in anticipation of tariff increase. Their facilities are filled up and they don’t have space again for storage,” he said.

He said the auto policy was capable of setting the country on the path of industrial revolution, adding that what was needed from the government to achieve that, was appropriate incentives and enabling environment for the growth and development of a vehicle auto industry in the country.

‘‘We need tariff protection because we are going to incur unimaginable cost. We killed this industry in the 80’s and we are coming up again. We are telling the government that we can fill the gap provided we are given protection,” he said, adding that his company has the capacity to produce 45,000 vehicles per month. The company is currently producing only 1000 vehicles at the complex

‘‘The total number of import in Nigeria is about 400,000 per annum. In this factory, we can produce half of that figure. We have other companies like Peugeot automobile in Kaduna, we have Anamco and many others that are spring up that can make up the figure, even surpass the Nigerian requirement. But we can not expand beyond our present production capacity until all other windows are closed for Nigerians to depend on locally manufactured vehicles”.

However auto dealers debunked claim by Aromolaran that the panic import of last year created a glut of auto products in the Nigerian market.

Godwin Mabaniyanje , a Lagos based auto dealer said it was not possible to stock pile new vehicles that would be outdated with release of new models as manufacturers are always coming out with new innovations.

“There is no truth in that claim, because new cars represent only five percent of auto demand by Nigerians . If you buy and keep, when new models are released, no one will come for your old model in the shop.

But for Tokunbo cars, do we have enough to satisfy the demand ? People don’t even have money to buy, may be ,that is why some people are saying there is agut”

But the president of the Council of Managing Director of Licensed Customs Agent, Lucky Eyis Amiwero said there was need to review the Nation’s Auto Policy, which focused mostly on tariff ,in order to address the domestic demand and supply of locally made vehicles for Nigerian market, evaluate the present state of the former and existing assembly plants and the graduation of Nigerian vehicles based on international standard as all vehicles (light and heavy vehicles) were grouped under the same tariff structure of 35 per cent. He said cargo diversion to ports in neighbouring countries also contributed to the decline in the number of vehicles being imported into the country

According to him, the partial implementation of the auto policy has caused diversion of cars carrying vessels to neighbouring West African ports as a result of increase of tariff from 35 per cent to 70 per cent

This, he said ,has reduced not only the maritime work force by 70 per cent, but operations at port terminals and shipping companies.

He said the new tariff on vehicles and the partial implementation of the auto policy has caused the country severe revenue loss due to smuggling and relocation of freight component of imports, terminal charges and ship dues.

‘‘The scheme has witness policy summersault with the following impact: The reduction of the maritime work force by 70 per cent which affect mostly the licensed customs agents, importer, dealers and Nigerians abroad, the relocation of freight component and the loss of customs revenue through massive smuggling…”