Automakers charge FG to get auto-policy underway
Managing Director Nissan South Africa, Mike Whitefield was one of the delegates of African Association of Automobile Manufacturers (AAAM) who recently met with President Muhammadu Buhari at the Villa in Abuja. In this interview, Whitfield, who doubles as President, National Association of Automobile Manufacturers South Africa (NAAMSA) and Vice President AAAM fielded questions from BusinessDAy Nigeria at the just ended Festival of Motoring at the Kyalami Grand Circuit, Midrand, Johannesburg South Africa, where he expressed high hopes that the meeting with the President far exceeded the association’s expectations but wished the Federal Government could redouble her efforts to get the auto policy underway. Excerpts:
You and the executive members of the African Association of Automobile Manufacturers (AAAM), recently met with President Mohammadu Buhari and his economic team in Nigeria recently, how would you describe your encounter with the president and his team?
Without mincing words, our meeting far exceeded our expectations. As an industry, we felt the African motor industry, particularly Nigeria is critical and by far, the market with the highest potential if we exclude South Africa. The government and notable stakeholders had a number of years ago between 1990 and 2014 took a bold step in terms of introducing the auto policy. Although the industry hasn’t moved at the speed everyone would like owing to a lot of challenges with implementation but coming together as an auto industry, we formed this association African Association of Automobile Manufacturers (AAAM) with Jeff Nemeth as the president and the objective of the association is to work with governments in Africa who have interest in establishing the auto industry. So our number one priority was to offer our support to the Nigerian government to develop a sustainable auto industry.
A sustainable auto industry has many facets to it – the first aspect is to build a legislative frame work that allows stability and gives certainty to distance over a long period of time. The other aspect is that no one is going to invest in a market unless it’s of reasonable size. If one looks at the Nigerian market 800,000 vehicles were imported plus or minus last year of which only 40,000 were new vehicles with grey imports or parallel imports. The size of the market can only happen if we can offer affordable solution. Affordable solution doesn’t only mean cheap car, but we have to find ways of creating access to finance for people to be able to buy cars. If you are lucky you would get vehicle finance at 24% in Nigeria and quite frankly at 24% you can’t do finance scheme.
How then did you and the AAAM felt evaluating this somewhat feeble situation?
I think the time has never been better for us to see how we can work together with industry parties in Nigeria to develop a sustainable motor industry. In South Africa, the auto industry creates sustainable jobs and employs directly more than 83,000 people and that is the result of many decades of work. We have to make it start in Nigeria. The potential is massive with more than 170 million people and over 350 million ECOWAS population, no one expects you to build an industry over night. However, there is potential if everyone can work together. I believe Nigeria could certainly become in a 20-year time period, a major force in the auto industry. Sustainability is the key. It shouldn’t be short-term project we all are going to focus on industrialization and diversification.
Just recently, the National Automotive Council announced the inauguration of 7.5billion naira counterpart funding for the long awaited vehicle finance scheme to purchase made-in-Nigeria vehicles which can be accessed at between 8% and 10%. How would you react to this?
That is one of the outputs of what we have been working on for a long time. But in addition to that, there needs to be a clear definition of who is the manufacturer. Today, Nigeria has 41registered motor manufacturers while in South Africa we have seven. What is important here is that the Nigeria manufacturers have to be part of the long term plan to ultimately move to what we call CKD (Completely Knocked Down) manufacturing. You can’t move to CKD unless you start establishing a proper and reasonably size market. First the policy must be right as in total market through vehicle finance and affordability and thirdly, the policy needs a very clear definition such that SKD ( Semi-knocked Down) is SKD, CKD (Completely Knocked Down) is CKD and those who are registered as manufacturers are truly manufacturers. That to me is very important.
How in your observation would you describe President Buhari’s body language when considered against his disposition towards the National Automotive Industry Development Plan (NAIDP)?
He is very positive. He is a man who certainly understood what is needed. He has an excellent overview of the challenges that exist. It is not easy and would never be easy to resolve used car issue. It is not something that can happen overnight until you resolve the affordability concern. He is decisive and has good understanding of the industry. And very importantly, all the government leaders we interacted with have a good knowledge of the business.
What then is AAAM attraction to Nigeria?
First thing, the government in Nigeria has already made a move and established the foundation of the policy. Yes there’s still work to be done to make it perfect but we all need to work together to refine the project. Number two, in the whole world there are only two countries with a population of more than 100million people that doesn’t have functional motor industry – Bangladesh and Nigeria. However, our choice is without doubt Nigeria. Obviously if the Nigerian government feel they don’t need our support we will go elsewhere but we are very happy they do want to work with us. But with the experience that we have as global orient, we can bring global best practices to Nigeria.
Local content development especially in the downstream sector has always been the contention, how do you intend to address this issue especially where virtually all the manufacturers bring in their CKDs?
As it is, there is no downstream. We have always deliberated on the local content issue and that was why we had with us as part of the delegation that met President Buhari the President of the South African Component Manufacturers Association. As manufacturers we fully understand we can’t establish a sustainable modern industry without component manufacturers, so in the very early days as we developed the programme with Nigerian stakeholders, we realised components and part suppliers are key stakeholders we need to bring along. We are aware of it and we are working on it.
What percentage of the Nigerian auto market is Nissan targeting ?
As a Nissan brand, we would like to be around 20% of 400,000 units and not 40,000 as the current volume of new vehicle market in Nigeria. Today, if you look at the vehicle market it is very difficult to justify any real focus in investment in the market that is only 40,000 or thereabout. However our focus is a long term approach. Everything we are doing in Nigeria today is because we have a long term faith.
Nissan South Africa in partnership with Stallion Nigeria was the first to set up plant in Nigeria, how would you describe the journey so far ?
Without doubt, we are not disappointed but we are obviously frustrated because things haven’t moved as we would have liked to see it move. This isn’t due to policy but lack of foreign currency. But having done business in many developing countries, we realise you don’t go into any country and expect a short-term success. We believe from the Nissan perspective we are moving forward as planned but we will like to see it move much faster. However, we are still very committed to the ultimate goal to have sustainable presence in Nigeria.
How would Nissan sustain the projected 20% share of Nigeria’s market when her stronghold has lately been the high-end market as against the low-end market ?
We intend finding solution to affordability first, and you are aware of our Datsun brand even though it is still only available in the right-hand drive. Indeed, we recognise one element, that what we do need to bring to the market is affordable transport solution and surely we will.
The gloomy market trend in the global oil industry has left most oil producing countries especially Nigeria exploring newer solutions in emerging SMEs. Surprisingly, Nissan isn’t exploiting this new market opportunity to at least, railroad into Nigeria some of its low-end products especially the NP200-half-ton pick-up truck. What is your reaction?
The only simple reason right now is that the NP200 half-ton pick-up truck is only available in right-hand drive but one of the options we are working on is how to get the left-hand drive. Two, we are addressing the affordability issue too and remember we also have the NP300. Very soon we will be launching globally the new Navara – a very fanciful and convenient pick-up truck for everyday and special purpose use. It is the latest pick-up from the Nissan stable. We believe there’s still a very strong role for a good, solid, affordable and reliable pick-up in Africa so both the NP200 and NP300 you saw at the Nissan South Africa factory are going to be carry on with. The NP300 however is a strong product we intend to offer to the SME market.
Stakeholders are at variance with grey imports and used vehicle imports to Nigeria and this issue might have been discussed during your meet with President Buhari, how was it addressed ?
The Nigerian government understands that to get real growth in the auto market you need to address the used vehicle market but in the same token there’s also responsibility to ensure that the Nigeria population can get affordable vehicles, so to stop used vehicles and not instantaneously offer solution for an alternative wouldn’t make any sense. So part of the objectives of the task team is how to do we work on that transition. For us the competition to new vehicle is not the five or six- year old vehicles coming to Nigeria or one year old or parallel imports. These are the things that do need to be stopped but fundamentally you can’t stop it without an alternative solution and that is what we are going to work on.
Where does your interest lies: Is it in building vehicles in Nigeria or exporting fully built up vehicles to Nigeria from South Africa ?
The best route is that we make vehicles in Nigeria within a very solid policy frame work that is enforced and implemented.
How does it feel being at the helm of affairs at Nissan ?
A: I’ve grown up in the motor industry. It’s the only job I’ve ever had. I’ve only worked for Nissan. I joined Nissan when I was 21 years old as a trainee – immediately after university. I had the unique opportunity of working in just about every area of the operation. During my course in Nissan I’ve been in the truck business when we still owned UD Trucks or Nissan Diesel as it was known in those days. I had a fortunate opportunity of developing and opening up our Nissan operations in Northern Europe and, in fact, I spent four years in Finland and developing Nissan’s businesses in Denmark, Norway, Sweden, Finland and the Baltic states. I then came back to South Africa approximately five years ago and have been focusing on developing and growing our presence, not only in South Africa but particularly in Africa. So I’m a Nissan person, that’s the only job I know, it’s the only place I’ve been, and certainly it’s a great company to be part of and a great brand to be associated with. I’ve been here a long time, it is an exciting industry, and it is fantastic. One of my key objectives is to see how we can grow Nissan in Africa not only in South Africa.
Tell us how Nissan had evolved from you getting involved all those years until now ?
I think business has become a lot more serious, and lot more sophisticated. The principles haven’t changed from a business perspective. One thing that has definitely changed is the price of our half ton pickup. When I joined I think it was about R3000 (USD208.795) or R4000 (USD278.471), today its well in excess of R100, 000 (USD6,962.59) which just gives you an indication of inflation.
But probably the biggest change I have seen if I look at it from a South African point of view is that historically the auto industry in South Africa was very much focused in supplying demand in South Africa, with very high levels of protection.
That has progressively come down to current duty levels ranging between 18% and 25%, which has meant we’ve got to become a lot more competitive if we are going to grow this manufacturing base to what is an intention of getting to a million units in the future.
So the biggest change, I think is, we’ve seen protectionism drop, which is a good thing because it does force us to become competitive and productive, and opened up the opportunities which many manufacturers, including ourselves, are taking advantage of, in terms of using this as a production base to export not only into Africa but other parts of the world.
So, South Africa, while still a very small part of the African or the global automotive market, when one considers that the global market this year – or last year will be close on 85 million and South Africa produced approximately half a million vehicles.
We still have a lot of opportunities left, but we need to continue to focus on increasing productivity and efficiency. And from a quality point of view the vehicles built here are as good as what is built anywhere in the world – but the real drive we need to do, is to ensure we maintain competitiveness and enable us to have a greater access to that global market of 85 million.
One of Nissan’s cardinal objectives is to strengthen the brand’s reputation on the African continent. How do you achieve these objectives ?
A: The Nissan brand stands for innovation and excitement, and it needs to be a coordinated approach throughout the world, and without doubt our drive is towards that. It’s not something that only the people within the business can do. The levels of service that our national sales companies and dealers and everyone within the dealers have also got to do that, and that’s got to be their philosophy and approach. We need to be consistent in what we do with the brand, and obviously as part of that, not only is it the above-the-line advertising you will see, but many of our recent activities are in ICC cricket, the UEFA cup, and these are all part of building Nissan brand value of innovation and excitement.
Mike Ochonma