Nigeria’s auto policy threatened by Budget constraints, affordability

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Despite the overwhelm­ing applause that greeted the Nigerian Automotive Policy (NAP) meant to wean the country off the hurting dependence on imported vehicles, many Nigerians are stiff scared that the Federal Government may end up over-promising and under-delivering, with regards to matching demand for brand new vehicles with affordability.

The masses are also insist­ing that the process is pre­mature as they argue that the capacity of local manufactur­ers cannot meet the country’s growing auto needs within a price range that is affordable to low income earners.

The Federal Government had through the Minister of In­dustry, Trade and Investment, Dr. Olusegun Aganga, intro­duced NAP in October 2013 to join the list of initiatives cen­tred on backward integration and import substitution like in the fertilizer, sugar, cement, fish and other segments of the economy.

The overall aim, accord­ing to Aganga, was to insulate the nation’s economy from becoming perpetually stunted due the age-long practice of dumping used products in the country thereby draining her foreign reserves while enrich­ing other nations.

The Minister said the policy was loaded with huge incen­tives including robust technol­ogy transfer and the creation of at least 700,000 jobs, with 210,000 indirect jobs in the SMEs that will feed the assem­bly plants.

However, for the policy to blossom, the Federal Govern­ment in August this year in­troduced a 70 per cent hike in tariffs for used vehicles to en­sure they remain commercially unattractive and possibly “arm-twist” Nigerians to key into the programme.

Expectedly, the issue has drawn the ire of Nigerians, who insist the country was not yet ripe for such policy take-off when the purchasing power of majority of her citizens is un­doubtedly weak.

They are also smelling a rat in government’s sincerity to make bank credit option ac­cessible to low income earners and as such prefer the old order of buying affordable used ve­hicles.

While the full policy imple­mentation awaits legislative clearance, Senate President, David Mark, joined others to express doubts over the af­fordability of the vehicles as a nation without steady power supply, raw materials and other needed components cannot possibly produce cheap ve­hicles that would be within the reach of ordinary Nigerians, the major target of the policy.

Unfortunately, the develop­ment has pitched the Nigerian masses against the government as each side has struggled to convince the other of the inher­ent benefits or otherwise of the programme.

Daily Sun checks reveal that what particularly angered Nigerians was that the Fed­eral Government auto policy spearheaded by Aganga along with National Association of Automobile Manufacturers (NAMA) had assured that the ongoing implementation of the Nigeria Automotive Industrial Plan (NADIP) will not cause an increase in the prices of cars.

But the complete opposite has played out as Daily Sun checks reveal that prices of ve­hicles have skyrocketed ahead of the Yuletide rush and 2015 when the policy would go full cycle.

A 2004/5 Toyota Camry Se­dan that was hitherto N980,000 is now N1.6 million. A Lexus RX-300 SUV 2002 model that was formerly N1.35 mil­lion is now N2 million. These prices could be slightly lower or higher depending on where the vehicles are displayed. It could be costlier if one is to buy from dealers at the Berger Automobile Market as they pay such charges as land space, park charges and security lev­ies among others. The same percentage of hike was seen across a spectrum of vehicles.

According to a freight for­warder, Chief Osita Chukwu, the prices of vehicles have al­most doubled because of high clearance costs, which have forced many importers out of business.

“The vehicle import from the USA to Nigeria has re­duced by about 60 per cent. Even the New York Times reported it. Most Nigerians there who hitherto bought and exported vehicles to Nigeria to make some cash have stopped. It’s biting everyone. You can­not buy a car at $2,000 in the US (about N350,000) and clear it with N400,000. How profitable is that? How much will you sell such a vehicle in the market?”, he queried.

The President of National Association of Government Approved Freight Forwarders, Eugene Nweke, insists the new auto policy ought to have been graduated.

“It should have begun with building the vehicle spare parts sector so that they can be pro­duced here and not imported before going into full policy implementation. Nissan should establish the spare part plant first before assembling the full components, rather than evolv­ing a policy that will make you import 2,300 components that make up a vehicle and assem­ble them here. The spare parts sector will even create more employment than the full as­sembly.

“We should again also de­velop the rubber sector for tyres and hoses and all that. We had Michelin and Dunlop doing that before and other companies producing wind­shields, bumpers and all that. But bringing parts in containers to assemble here is a policy not properly digested.”

Reacting to the develop­ment, Manny Philipson, the Media Consultant of Stallion Group, makers of Nissan brand of vehicles, told Daily Sun in a telephone interview that those criticising the policy are doing so ignorantly.

He said the insinuation that the company lacks the capacity to meet the vehicle demands of Nigerians is a sustained effort by those profiting from dump­ing of used products in the country to remain in the eco­nomically injurious business.

“We have the capacity to meet the vehicle needs of Nige­rians and the argument that our vehicles are not affordable is not true. The government has granted concessions in forms of tax holidays to CKD plant owners. This will balance up areas of challenges like power and other infrastructure, which are being addressed anyway. So, if the condition is not good, the manufacturers won’t come into it. We only need a better operating environment in the sense that we want to be sure Nigerians will buy. There is no need making cars that will not be purchased.

“We’re making progress. 18 months when we took off, we have produced over 6,000 vehicles. The former dealer with the franchise was import­ing 600 new vehicles annu­ally. Our vehicles are equally cheaper and they meet interna­tional standards because they are global brands, he said.

 

 

 

SOurce:Daily Sun Newspaper

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