It is a known fact that Nigeria is a vehicle importation-dependent economy; a business that is divisible into two broad categories, namely: new and fairly used vehicles.
It is a known fact that Nigeria is a vehicle importation-dependent economy; a business that is divisible into two broad categories, namely: new and fairly used vehicles.
Without mincing words, importation of used (Tokunboh) vehicles has been a lucrative business in Nigeria; both for Nigerians and for their relations abroad who ship those vehicles into the country. There is long chain of players, including the importer, the shipping lines, the clearing agents, the port authourity, the terminal operators, the Customs, etc all of whom are directly connected (one way or the other) to the vehicle importation business.
At the peak of vehicle importation business, it is not unusual to see that, on daily basis, ships bring in new and used vehicles into the country through the nation’s seaports; in fact some ships and some terminals are already synonymous with that category of imports.
From available records, the business of vehicle importation wasn’t very pronounced in Nigeria until the late 1970s when Nigerians started developing tastes for exotic cars.
But, between 2000 and 2009, there was an upsurge in the purchase of new cars as banks opened their doors to the middle class who desired new cars; a development which threatened importers of fairly- used vehicles, but it appears that the fear no longer exists as both still enjoy a sizeable chunk of the market.
Perhaps acknowledging the status of Nigeria as a vehicle importing nation, but determined to address this, President Goodluck Jonathan said at the World Economic Forum which held earlier in 2014 in Davos, Switzerland that : “The only way to reduce the preponderance of second hand cars on our roads is to produce good quality cars with affordable pricing locally”.
At the forum which also had in attendance some leading automobile manufacturers, the President left no one in doubt that Nigeria’s National Automotive Policy has come to stay. He stated also that the objective of the new policy is to make new cars affordable to more Nigerians.
The Nigerian new automobile market is dominated by most of the global brands like: Toyota, GM, Nissan, Honda, BMW, Audi, Mercedes, Hyundai, Kia, Volkswagen, Skoda and a host of others.
In the new cars segment, the market leaders are Stallion Group (owned by the international billionaire businessmen; the Vaswani Brothers that holds the exclusive sole representations for prime European, Japanese and Korean brands. But, in the used vehicle genre, brands like, Toyota and Honda are hot favourites.
And true to its determination, one can safely say that the auto policy implementation has kicked-off; albeit, partially.
Already, some directives associated with the policy give room for concern. The most apparent of these directives is that which concerns collection of revenue on imported used vehicles. Its implementation has pitched stakeholders against both the NAC and the Nigeria Customs Service, which at first was bent on collecting 70 per cent tariff and levy.
It took protests and lobbies for the implementation date to be shifted to January 2015, and probably it took some unseen circumstances for the current extension to April, 2015.
We are convinced that the decision to collect 70 per cent revenue on used imported vehicles is very very unpopular among most Nigerians.
But again, some have argued that, there are indeed no alternatives to used vehicles. We disagree and maintain that here are, as evidenced by the vehicles that are now being assembled by a few of the auto assembly plants.
However, our major concern is the immediate effect of the policy, especially when the collection of 70% tariff starts.
Certainly, importation will drop, and it has started dropping already going by what stakeholders have said.
Managing Director of Nigeria's biggest vehicle importing terminal, the Port and Terminal Multiservices Limited (PTML) Mr Ascanio Russo confirmed recently that the policy has affected the importation of vehicles into Nigeria by as much as 50%.
More worrisome is that he added that many of the vehicles that should ordinarily pass through the terminal are now coming into Nigeria through Cotonou port and that Grimaldi in Cotonou is making money while its counterpart in Nigeria is losing money.
"The figures we have seen is that the volume of vehicles being discharged in Nigeria has dropped by 50%, these are actual figures. Last year, the whole of Lagos we were receiving 25,000 vehicles every month, but now it is 12,000 vehicles"
"At the same time, we have noticed that the volume of vehicles going to Cotonou has increased dramatically, so everybody can understand what this means, we are losing business, Cotonou is gaining business, and we know that their population has not doubled, it is still the same number of people that are there" he said.
Certainly, the auto policy will lead to job losses in the Nigerian port system, it is already causing revenue losses to both the Nigerian Ports Authourity and the Nigeria Customs Service.
We condemn the increased tariff payable on imported vehicles. It would have been expected that the new policy would take-off before a discriminatory tariff would be introduced.
A fully functional automotive policy will no doubt lead to gainful employment for many Nigerians. This is more so since the government is planning to create automotive clusters in Ogun and Lagos States, Kano and Kaduna States, Enugu and Anambra States.
While we agree that creating automobile clusters in different parts of the country will reduce cost of manufacturing and also create employment, we still see the rush to hike tariff as akin to putting the cart before the horse.
It’s our opinion that, in line with the 10 year gestation period for the policy, government should have equally given importation of used vehicles a 10 year grace period. In the alternative, let importation of used vehicles go side-by-side with local manufacturing.
In conclusion, we align with the position of President Goodluck Jonathan that the only way to reduce the preponderance of second hand cars on our roads is to produce good quality cars with affordable pricing locally.
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