‘Automobile business is worst hit by economic shortfall’
Maryann Chukwueke is the Managing Director and Chief Executive Officer of Admiralty Motors Limited. The company provides vehicle workshop and after-sales services. In this interview with KINGSLEY JEREMIAH, she discusses key issues, particularly the effects of the current economic challenges on the automotive sector.
There has been an outcry on the influx of substandard and fake vehicle spare-parts importation into the Nigerian market, how can we address this situation?
Most of what will do in the automobile business is foreign exchange based. One “original” brake pad for a Toyota Prado is now N60, 000. Most citizens can’t afford to fix brake pad for N60, 000. But when you go to the open market, things called brake pads can be sold for N6, 000 or less. So what is happening? People are buying the fake products because the “real ones” are just unaffordable. With the loss in value of the naira and the prices of spare-parts tripled, the situation is becoming unbearable. People are turning to alternatives parts, which are basically imported from China. This is because the Chinese merchants are here and that is why they can still maintain the low prices. In the past, importers go to Turkey to bring in most of these parts. Though they were alternative parts but are fairly good. The Chinese merchants have infiltrated the market. They bring in fake spare-parts and sell them at ridiculous prices but they are not of any reasonable quality.
I saw two Chinese men in the newspaper arrested with bundles of fake tyres and the government was saying something like they seized the tyres. We are looking forward to a time in our country, where the Standard Organisation of Nigeria (SON) can actually carry out quality check on imports coming into the country. What is happening right now is that they carry out ghost inspection and collect money from people. We are talking about inspections compare to what is obtainable in Ghana or even Benin Republic. In those two neighbouring countries, you can have reasonable quality and standard. I buy from there and the qualities are trusted compare to the Nigerian market. Standardisation is fundamental. Government must do that for the citizens.
How has the current economy affected your business?
It is an understatement if I say it is very challenging. I believe that the automobile business is worst-hit by the economic situation. The foreign exchange policy is the singular influencing factor in our line of business. Right now cars are not manufactured in Nigeria and perhaps some people are assembling parts but there is no manufacturer in the country. Most of the cars that come into the country are imported so the foreign exchange policy has made it almost impossible for citizens to buy new cars, even used cars. Prices of vehicles have tripled. A brand new Toyota now sells for N17 million as against N5 million. That is over 300 per cent increase.
What is your company doing to help car owners survive the recession?
This is actually a very tough time. We operate at the Lekki-Epe axis of Lagos and most of the dealers around the axis have closed shop. We have cut down on our workforce and only have few people doing the core job. The customers are not coming any longer because the spendable income is no longer there. We are getting only 30 per cent traffic because most people no longer receive salary adequately. We have cut down prices of our services but because there is just no much money in circulation, it is very difficult on both sides. We cannot even maintain our main structure any more because the business is very capital intensive and the banking industry is not helping. Some of my colleagues have shutdown. Some of my friends have told me that there is no point going to the office. They have laid-off their workers and are waiting for the economy to pick up. Sales and services from the big dealers are dismal; they are just fighting to stay afloat. We are patiently waiting for government. We have heard that recession is over in Nigeria, all that needs to change is for the FX policy to go back to status quo. If the foreign exchange policy don’t change, things will not get better in the country. From all indication, the country is dependent 95 per cent on importation. Unless the foreign exchange policy goes back to something close to the status quo, I don’t see reasonable changes in the economy. The fact that foreign base companies cannot repatriate their funds in dollar affected those companies and most of them have closed up.
Apart from the current FX problem, why is the cost of vehicle maintenance and after market so high in Nigeria?
I will like you to call it alternative parts because that is what they are. Because most of the parts you have in the country are not of standard and as soon as you buy them and put them in the car they immediately go out of alignment. They make other parts over compensate and when that happens, the vehicle breaks down. It is as simple as that. It is just like the human body, when you have certain parts over compensating for another, breaking down is imminent. These factors determine how frequent the vehicle breaking down.
What would you say are the biggest mistakes Nigerians make in using their vehicles?
The biggest challenge is that we don’t have maintenance culture. We don’t have the habit of servicing cars as recommended by the manufacturer, that is what people do oversees. We drive the cars until there are chronic problems and the vehicle breaks down. So when the car breaks down, the customer comes to you saying he wants to service the car, meanwhile the vehicle is already in bad condition.
We need to itemize servicing our cars just like other utility bills to keep our cars running optimally.
The second thing is the knowledge of what needs to be done; when and how and where. Those are very important because when we sell cars most of the time, necessary information don’t get to the end users; the recommendation does not get to the end users in many cases. So you run in to customers who say, ‘I didn’t know I need to service a car every three months or 5,000 kilometres and that is why I have used it for two years’. We still get that type of feedback. Knowledge and awareness is something that dealers need to work on so that everyone driving a car is aware of what needs to be done.