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‘Vehicle financing pivotal to automotive industry growth’

By Benjamin Alade
27 December 2019   |   3:55 am
Stakeholders in the nation’s automotive industry believe that without proper vehicle financing schemes, the growth of the sector cannot be fully achieved.

Stakeholders in the nation’s automotive industry believe that without proper vehicle financing schemes, the growth of the sector cannot be fully achieved. While at the global level, the automobile industry has shaken off the effects of the global financial crisis, Nigeria has continued to pose policy and infrastructure issues, which turn up, on consistent basis, tough operating environment.

The small and medium sector operators have also been squeezed by the poor economic conditions, as they now go for the fairly used vehicles that are seemingly less expensive, causing Nigeria’s auto industry, unlike its counterparts in other countries, to face challenges that retard its growth potentials.

The stakeholders said one key thing that is lacking in the automobile industry is financing. The sector will not grow if proper financing mechanisms aren’t in place for people to buy cars.

Managing Director/CEO of Cars45, an automotive trading platform, Etop Ikpe, said everywhere in the world, there are about 90 to 95 per cent purchases of cars that are done through loans and leasing by government or private entities. “Until we provide adequate financing, producing locally made cars will not be affordable,” he added. Ikpe who disclosed this at a briefing in Lagos, also confirmed that land border closure has been a blessing to the auto companies.

According to him, border closure, economically has its own challenges, it is helping the company create awareness for people to get their Custom duties when importing a car or vehicle into the country. He said one of the problems discovered had to do with documentation.

To address this challenge, he said the company had introduced the ShipEasyDirect service to help buyers with documentation to avoid running into problem with the Nigeria Customs Service (NCS). According to him, the main goal of Cars45 as a platform, is to guarantee the protection of buyers and sellers when it comes to vehicle documentation.

The sustained closure of land borders in Nigeria may have pushed up the sales of brand new vehicles in Nigeria with automobile companies reportedly hitting 11,000 units in 2019 alone.

Auto dealers struggled last year to hit the 10,000-mark which wasn’t achievable as a result of the dwindling purchasing power of the people especially for brand new vehicles.“What the border closure did was that it created awareness for people to be more conscious of their duty payments. We have seen an upsurge for patronage of payment of duties. We believe that at the end of the day, if people do the right thing, there will be no need for border closure.

“We also think the border closure should be consumer-driven. Government should put transparent technology in place whereby buyers are empowered to confirm independently the duties of their vehicle from any car dealer.” He however said Nigeria needs to do more in making financing available for vehicle purchase, adding, “One key thing in this industry is financing. The NADDC (National Automotive Design and Development Council) is working on this.”`

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