Emerging trends in Nigeria’s automobile industry
After several years of vehicle imports, Nigeria could be back to the vigourous era of Mercedes assembly plant in Enugu, Volkswagen plant in Lagos, Peugeot plant in Kaduna, or equally that of the old Leyland and Leventis Motors.
The new automotive policy introduced recently by the government may have taken some censure from the public due to perceived increase in duty and levy on imported vehicles, but analysts and policy makers see more positives from its economics than negatives.
“Since the launch of our new auto policy in October 2013, we have witnessed three leading global brands commence vehicle assembly in Nigeria – Nissan, Hyundai and Peugeot,’’ said President Goodluck Jonathan, who was represented by Vice President Namadi Sambo, at the 42nd annual general meeting (AGM) of Manufacturers Association of Nigeria (MAN), held last week in Lagos.
“We have witnessed existing local players such as Innoson in Nnewi attract new partners from China, to expand their capacity and output in Nigeria,’’ he said.
“Over 10 other companies have shown interest and have commenced plans for assembly operations in Nigeria. This is a sure way of steady development of our country to create jobs and wealth for Nigerians,’’ he said further.
At the last count, a sizeable number of existing new car dealers have initiated moves to set up one assembly plant or the other; a move that would see them graduate from churning out vehicles (from SKD, SKD 2) to full scale CKD stages of automotive manufacturing. At the moment, Stallion Automobile Group, owner of VoN Automobiles, has begun churning out Ashok Leyland buses. Investigations showed automobile assembly operations have started at the plant as the firm has commenced a phased delivery of low-priced made-in-Nigeria cars. This development is coming after the Stallion Group rolled out locally-made Nissan Patrol SUV range of vehicles in April.
Recently, PAN Nigeria resumed car assembly operations with the intentions of rolling out the Peugeot 301 after several years.
Coscharis Motors and Kia Motors are also making fresh moves to join the automotive assembly league, while the likes of Transit Support Services Limited, Peace Mass Transit and Globe Motors are gearing up to set up their own assembly lines to either produce heavy duty trucks, pick-up truck or commercial vehicles with various completion timelines.
It is anticipated that at full capacity, the policy can lead to the creation of 70,000 skilled and semi-skilled jobs, along with 210,000 indirect jobs in the small and medium-scale enterprises (SME) sector that will supply the assembly plants. About 490,000 other jobs would also be created in the raw materials supply industry, according to Olusegun Aganga, minister of industry, trade and investment.
Under the new auto regime, local assembly plants shall import their Completely Knocked Down (CKD) at 0 percent duty, Semi Knocked Down (SKD) at 5percent duty and shall import Fully Built Unit (FBU) cars at 35 percent duty and 20 percent duty for commercial vehicles without levy, respectively, in numbers equal to twice their imported CKD/SKD kits.
While this has been hailed as a good policy, stakeholders wonder whether the new investors can roll out vehicles that will be affordable to the middle-class Nigerian. They add that there needed to have been a take-off of ancillary industries before the regime began.
Remi Bello, president, Lagos Chamber of Commerce and Industry (LCCI), said an automobile industry must have high local value addition and capacity for backward integration.
“There must be ancillary industries for the production of batteries, glass, radiators and tyres. There must also be affordable finance for the investors, because development of the sector would not thrive in an environment where the cost of fund is between 25 and 35 percent,’’ he said.
Data from the Manufacturers Association of Nigeria (MAN) show the motor vehicle and miscellaneous assembly recorded capacity utilisation of 42.7 percent in the second half of 2013 (H2 2013), as against 37.1 percent in the first half (H1 2013). The sector sourced only 14.42 percent raw materials locally in H2 2013 as against 12.54 percent in H1 2013. Investments in H2 2013 amounted to N571.98 million in H2 2013, as against N760.16 million in H1 2013.
Odinaka Anudu