Nigeria is a vehicle importation-dependent economy; a business that is divisible into two broad categories, namely: locally assembled vehicles and imported (new or fairly used) vehicles.
Without mincing words, importation of used (Tokunboh) vehicles has come to stay as a lucrative business in Nigeria; both for Nigerians and for their relations abroad who ship those vehicles into the country.
Nigeria is a vehicle importation-dependent economy; a business that is divisible into two broad categories, namely: locally assembled vehicles and imported (new or fairly used) vehicles.
Without mincing words, importation of used (Tokunboh) vehicles has come to stay as a lucrative business in Nigeria; both for Nigerians and for their relations abroad who ship those vehicles into the country.
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 importation of vehicles.
From available records, the business of vehicle importation wasn’t very pronounced in Nigeria until the late1970s 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 the year 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 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.
Notwithstanding the visibility of foreign assembled vehicles, the concern has always been about the need to revitalize Nigeria’s automobile assembly plants and owners of such plants as well as stakeholders in the sector have been renewing their clamour for a shift in policy towards revitalizing the local auto industry.
And while enunciating the new auto policy, the minister of trade and investments, Dr Olusegun Aganga said the new policy would involve an upward review of tariff on imported vehicles as a direct measure to develop the Nigerian automotive industry. Aganga also said the ministry had commenced, with immediate effect, the implementation of the Automotive Industrial Policy Development Plan.
We are quite in support of the position of the director general, National Automotive Council, Mr. Aminu Jalal that the craze by government officials for foreign-assembled vehicles for official and operational duties was part of the reasons for the death of the local assembly plants. There is no doubt that this taste has facilitated capital flight and caused unemployment and eventually, succeeded in killing the sector.
While Stallion Group was coupling and refitting the old Volkswagen plant in Lagos, an indigenous firm based in Anambra state; Innoson Vehicle Manufacturing Company (IVM) has also rekindled the push for a greater share of the Nigerian automobile market.
Certainly, IVM has not had a good share of the market, but that may change, given the drive of the new government policy on automobile. It has already rolled out what can be regarded as a truly Nigeria-assembled vehicle.
It is obvious that Nigeria is borrowing the model of countries like Brazil, China, Malaysia, India, Iran, Indonesia, Thailand and South Africa, which took deliberate steps to develop their automotive industry between the 1960s and 1980s. And buttressing this, the minister of investment acknowledged also that, “Nigeria started about the same time in the 1970s. These countries have, however, developed well advanced automotive industries, in contrast to Nigeria. The Nigerian auto development plan will promote investments in the assembly of inexpensive cars in the country at prices, which Nigerians can afford, and will gradually substitute the large and growing car imports coming into the country.”
It is not an overstatement that the National Automotive Council (NAC) which was established in 1990 and backed up with a national automotive policy, which unequivocally states that the aim is to ensure the survival, growth of the Nigerian automotive industry using local, human and material resources has failed woefully.
The NAC has not achieved its objective and our fear is that the new automotive policy may go the way of the one before it.
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. We are convinced that the decision to collect 70 per cent revenue on used imported vehicles is very very unpopular among most Nigerians for the obvious fact that there is no alternative to such used vehicles.
We condemn this rush to increase tariff payable on imported vehicles. It would have been expected that the new policy would take-off before a discriminatory tariff will 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.
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