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Automotive industry needs coordinated policies to support growth

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Vehicle assembly plant in Ogun State. PHOTO: BENJAMIN ALADE

The year 2020 was undoubtedly a challenging one and brought world economies and industries particularly the automotive industry to an unavoidable halt.

There is the need for people to commute and move from one place to another and the auto industry thrives on this premise. However, one of the major casualties of the coronavirus pandemic is mobility; restrictions on the movement of people were enforced to limit the spread of the virus, ultimately taking a significant toll on businesses in the industry across the globe, including in Nigeria.

In the past year, face-to-face business models have changed radically into a digital space wherein services are offered in real-time across the digital platforms at the comfort of the customers’ homes, thereby reemphasizing the integral role of the Internet of Things [IoT] occasioned by the COVID-19 pandemic.

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In the phase of this inundated development, looking forward into 2021 with a second strain of the virus, it is imperative for the industry to adapt to the new realities and continue to cater to the needs of the customers. Digitalization of business operations is now more than ever very important to the sustenance of service offerings.

To mitigate the challenges posed by the outbreak of the coronavirus, auto firms in the country adopted Information Technology (IT) systems to reach out to more Nigerians for market penetration.

Auto dealers were seen updating their customers with up-to-date information of vehicular needs through their respective electronic channels with the launch of online portals that virtually takes the car showrooms of different brands to homes and offices.

However, one of the issues that shaped 2020 in Nigeria was the recent move to slash the tariff on imported cars from the initial 35 per cent to five per cent, as contained in the 2020 financial bill of the ministry of finance, was worrisome for stakeholders and called for a critical look before implementation.

There is no denying the fact that the present auto policy wherein the tariff and levy amount to 70 per cent has posed some challenges to the importation of used cars into the country, but ultimately, the policy framework was a well thought-out plan to industrialise Nigerian economy.

Concerned about poor implementation of some of the policies, particularly the National Automotive Industry Development Plan (NAIDP), stakeholders expressed the belief that Federal Government’s inaction towards the automotive policy is slowing down the desired potential inherent in the sector.

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For every country that sets out to diversify its economy and create a sustainable balance of trade, a policy such as the auto industry is germane in making sure that there are lasting gains for the economy. Recognizing the critical contribution the auto industry plays in the development of economies across the globe, some African countries are already on the path of industrialisation through the auto industry.

African countries such as South Africa, Ethiopia, Ghana, and Kenya among others are aware of the evidence from automotive manufacturing countries like Germany, the United States of America, Japan, South Korea, China, and India, that the sector promotes industrialization.

Some of the industry players, who spoke to The Guardian, said the auto policy has literally addressed the shortfall of the new tariff regime and expressly stated that for the policy to materialise, the importation of cars through land borders should be banned.

Head, Sales, and Marketing, Hyundai Motors Nigeria Limited, Gaurav Vasisht, said: “Last year was a challenging one for the automotive sector, sales dropped drastically coupled with the restriction of movement due to the pandemic.

“Although there were some few corporate sales but not as expected when the economy is fine. We hope that when the vaccine is available, people would feel safer and agile to purchase vehicles. We are optimistic, we believe this year would be better than last year,” he added.

Marketing Manager, Kia Nigeria, Olawale Jimoh, said the current economic realities in the country can be troubling and deeply concerning, ranging from the paucity of foreign exchange, value instability and policy inconsistency in the auto industry.

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Jimoh added that pockets of insurgence, cash crunch, the myriad of downsizing companies, depleted buying power among others had thrown open the Pandora box of the downward trend of the auto industry affecting the growth and most times the sustenance of auto companies in Nigeria.

He said in view of this and as a company with the industrialisation of the country in mind, Kia remains optimistic and is committed to making the best of the situation the industry is confronted with.

“As the auto industry undergoes turbulent changes, we at Kia take it as a rare opportunity to radically transform our brand into a global enterprise dedicated to spearheading customer value-led innovations. Locally, we will actively take on the challenges ahead by providing customer-centric cars and service offerings, identifying and capitalizing on new opportunities to propel the company forward.

“Locally, we will also relaunch the brand and harp on the new brand strategy to align our model range and service offerings to the needs of our car owners and transform Kia into a ceaselessly innovative brand by accelerating its bold and pre-emptive transition to future businesses,” he said.

Speaking on the transportation sector, Dean, School of Transport, Lagos State University (LASU), Prof. Samuel Odewumi, said if there is anything to point to that could be described as achievement in transportation, it is the gradual progress in the rail mode. The speed is agonisingly slow and this is compounded by COVID-19.

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However, he said whenever there is a lockdown of economic activities, the hardest hit will be transportation.

In his words: “As for improvement, it is that there must be policy consistency and stability. Policy somersault should be drastically minimised if we can’t totally eliminate it. Just imagine what happened to the levy on imported vehicles and how that negatively impacted on local manufacturers like Innoson Motors.

“I expect the transportation masterplan to be updated and proclaimed to have a work plan or roadmap. What we are doing now is uncoordinated development that is just patchwork of sentimental resources allocation on the basis of whims and caprices of the situational government officials,” he said.

Chief Executive Officer of West Atlantic Cold-Chain and Commodities Limited, Henrii Nwanguma, advocated for more investment in water transport especially for Lagos led actively by the state that can enact regulations to push the development. According to him, it is relatively cheaper than rail and all that is required is maintenance dredging.

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