Assembly plants in neutral gear as election nears

With less than one year into the next general elections, an air of uncertainty and confusion is still the order of the day among auto dealers otherwise referred to as Original Equipment Manufacturers (OEMs) representatives in the country that had invested heavily in setting up local plants in what could be described as motion without movement under the purported 10 year National Automtive Industrial Development Plan (2013-2023).

The automotive policy appeared to have gained traction under the former administration of former President Goodluck Jonathan. For some of these assemblers that has invested massively into assembling locally, it has been years of lamentations as they are yet to feel the positive impacts of their investment and benefits of the policy.

The euphoria that greeted the policy has almost become extinct as disenchantment and outright conviction that the policy will suffer the same ill-fate as the ones precedeing it are becoming obvious. Vehicles prices are still on the roof top, while the middle class cannot afford brand new cars any longer.

According Daniel Nwosai, ‘’both Olusegun Aganga, the former minister of trade and industry, trade and investment under ex-president Jonathan and Okechukwu Enelamah, his present successor are some of the best brains in the cabinet, it is baffling why the auto assembly plants are still where it is.

Under the present administration, it would be recalled that Okechukwu Enelamah, minister of industries, trade and investment have held several stakeholders meeting that many hoped would find solutions to the lack of motion under the automotive policy, in addition to some legislative moves to that effect, yet there is no light at the end of the tunnel.

Confronted with all the bottlenecks and current challenges, it seems we are back to square one, as inertia and confusion is now the order of the day. To Oseme Oigiagbe, past chairman of the Automobile and Allied sectoral group of the Lagos Chamber of Commerce and Industry (LCCI), ‘’the implementation of the policy has been that of more motion without movement’’.

Apart from Innoson and PAN that has supply orders to execute, is doing serious auto assembly, there seems to be little or no serious assembly of vehicles ongoing in the country.

Analysts say this negative development is not unconnected with the inherent bottlenecks and encumbrances in the system as well as the change in policy drivers and the general economic downturn which have plagued the nation few years back.

These include but not limited to the pervasive low demand of brand new vehicles occasioned by decreasing purchasing power of the buying public, persistent economic recession, spiralling inflation, non availability of capital and financial resources to buy new cars, devaluation of the naira against major currencies and lack of access to funds for investment in the sector.

There is high cost of assembled vehicles in the country as a result of lack of access to foreign exchange, high cost of production, availability of cheaper alternatives especially functional second hand cars.

Other factors include ineffective implementation of government’s policy on buy Nigeria made goods and poor state of infrastructure such as electricity, roads and sea and airports.

To cap it all, there is no law backing the policy and a lot of areas in the policy are opaque with grey imports still flooding the market and the regulatory authorities like the Nigeria Customs Service incapable of making accurate data of imports available.

Mike Ochonma