Kia CEO offers blueprint on local auto-industry

The automobile industry in Nigeria has a potential to contribute immensely to the growth and development of the country’s economy. Many countries across the globe have harnessed the great imports of the industry to enhance the growth and sustainability of their economy.

Notable amongst these countries include South Africa where the automobile sector held a special place in their industrialization strategy. At the current state of the nation’s economy with numerous challenges, it is paramount for the new government to focus on the overall sectoral rejuvenation, economic strategy and trade policy.

In view of the growing concern by a stakeholder on the sustainability and possible review of the auto policy, Jacky Hathiramani, chief executive officer of Kia Motors Nigeria is joining other concerned industry players to chart a new course for the government and called on president Muhammad Buhari to address the key issues and lingering challenges in the development of Nigerian automobile industry.

In his proposal, he posited on the germane significance of the industry and how pertinent it is for the new administration under President Muhammadu Buhari to bring to bear the progressive change it had instituted in its campaigns and programmes to the automobile industry.

According to Jacky, one of the major challenges bedeviling the development of automobile industry is the huge and increasing volume of used vehicles importations. He espoused that “for the industry to grow, the importation of used vehicles need to be addressed.

Despite the business challenges it pose to the local manufacturers, the level of the economic menace it constitute cannot be overemphasized. The government needs to be steadfast in its pursuit of economy growth by tackling importation of used vehicles and also strengthening the border to drastically reduce the spate of smuggling into the country.

When the administration addresses the influx of the used vehicles, there will be a corresponding demand for the new locally made cars which will create a mass production and in turn drastically reduce the prices owing to a resultant effect on the cost of production.

He opined that, the thrust of the Nigeria auto policy needs to be restructured to further create an enabling environment for the local assembly plants. Taking a cue from developed countries where local manufacturers are given government aids and tax exemptions for Semi Knocked Down (SKD) parts and components from import tariffs, the current administration can further reduce or exempt local companies from import tariff.

This move he noted will go a long way in reducing the cost of producing the vehicle thereby reducing the prices and giving them a competitive edge. While lamenting on the current state of the nation’s power supply, he appealed to the federal government to revamp the power sector for adequate provision of energy to support local plants.

The operational cost of an assembly plant in Nigeria today is high based on the epileptic power supply and the high cost of running power generators has continued to have effect on the pricing of Nigerian made vehicles.

Jacky stated that adequate power supply is the fulcrum for sustainable economic growth. To make the locally assembled vehicles compete favourably and produce affordable vehicles to the teeming publics, the business environment needs to be conducive.

The key initiative of the government should be centred on reducing the cost of doing business in the country, stressing that the current administration needs to focus on pragmatic automobile policies to drive growth and economic diversification.

Foreign automakers not partnering with local companies to establish assembly plant needs to be barred from operating in the country to help strengthen the local assembling plants. Most importantly, the government needs to encourage the local assembly plant owners by enlisting them in its fleet requirements and solely use vehicles that are assembled in Nigeria.

As a developing country with a potential for economic growth, it’s of utmost significance to address the key issues in the automobile industry. Jacky stressed that the new political dispensation which rides on the goodwill of President Buhari offers a great opportunity to bring about the desired change in the economy and it’s important to immediately formulate investment friendly policies and embark on a trajectory growth of the economy through structural development of the auto industry.

There is the need therefore for the administration to establish a constructive and transparent policy to promote the development of local businesses. If the policies are well implemented, Nigeria will in no time supply the made-in-Nigeria vehicles to neighbouring countries and the country can move from consuming economy to a producing nation thereby ushering in trade surplus in the country’s balance of trade.

MIKE OCHONMA