Automobile Industry: Environment Does Not Encourage Investment
Maryann Chukwueke is the Managing Director and Chief Executive Officer of Admiralty Motors Limited. The company provides vehicle workshop and after-sales services. She shares with KINGSLEY JEREMIAH hints for improvement of automobile sector in the country.
The country’s automotive policy favours the use of brand new vehicles, which are not affordable by majority of Nigerians, what are the financing options available for those planning to buy new vehicle?
ONE sure way by which Nigerians can own brand new cars is the introduction of car lease scheme. Not the way we are doing it in Nigeria, but the way it is done oversees. When I worked for Toyota sales in North America, many people could walk into the car shop and get a brand new car and they didn’t have to pay the full price. That is what is lacking in our financial system, because we live in a country where the banks are free to seek as much profit as they can find. In U.S. for instance, we were giving out cars on lease basis to customers for two years.
They paid only one-third or half of the price, as the case maybe. What that meant is that you will take a car of about N4m, own it for two years and be liable to pay two million. That has made it affordable for more of the Americans. Here, when a bank says I am doing a lease, it is still a finance lease. So it is not a real lease. Let’s have a real lease that can make customers own brand new cars.
What are the implications of tariff increase on used vehicles?
The information that the regulators are looking for 70 per cent increase in tariff for second hand cars is putting the cart before the horse. The progress of the country is not about banning ‘Tokumbo’ cars. There is no progress there. We live in a country, where poverty is at about 70 per cent, and poverty is about people’s income. It is about how much income is at the disposal of people to make a living. In other countries, an average person can get finance, but in this country we have little of such.
Yet we have to move about. What are the options for the average person; there is no efficient transport system in the country. How many people can afford new cars, when a brand new Corolla is going for at least N5 million? There is no new reasonable car that is less than between N3m and N4m. How many Nigerians can get such money? So many of these things are premature, we have to do the basic things first.
How do you see the National Automotive Industry Development Plan and the industry generally?
My personal opinion is that the policy is premature. In economies, like in South Africa, there is an enabling environment and inceptives to attract manufacturers’ profitability. This is not the case in Nigeria. We don’t even have regular power supply to begin with. For instance, my organisation runs on generator 24 hours daily. We have a water system that we put in place by ourselves. These are not the type of situations that the international market is used to.
Inviting manufacturers to come to Nigeria and set up shops is a good thing. But it is a tall ambition at this time, because there are certain basic fundamental factors that we have to put in place before such dream can be tenable. Some manufacturers said they have put together SUV in Nigeria, but you know that is just a gimmick. There is no single vehicle manufacturing plant in Nigeria, not as we speak. I think the fact of the matter is that, to put up a manufacturing plant in Nigeria, like what Peugeot used to have in Kaduna, we need a 10 year development plan.
The manufacturers overseas will need to carry out feasibility study, bring the money and invest and be sure of profitability. The whole thing is not a game; it is about creating wealth and giving opportunity for jobs. So it takes quite a commitment and huge investment. We are looking forward to seeing how that can come to pass in Nigeria.
However, I like the fact that our government is putting very expensive tax on luxurious automobiles, because, what that would do perhaps, is to generate more revenue for government. I believe that the tariffs on regular cars and busses should not be more than 20 per cent because transportation in our country is very limited. People are not able to get to where they want at the right time. We don’t have a good mass transit bus system in place in most of the cities, not to talk of the countryside. We don’t even have a functional railway system.
We live in a country, where poverty is at about 70 per cent, and poverty is about people’s income. It is about how much income is at the disposal of people to make a living. In other countries, an average person can get finance, but in this country we have little of such. Yet we have to move about. What are the options for the average person; there is no efficient transport system in the country. How many people can afford new cars, when a brand new Corolla is going for at least N5 million? There is no new reasonable car that is less than between N3m and N4m. How many Nigerians can get such money? So many of these things are premature, we have to do the basic things first
In the auto business, many stakeholders are in the bread and butter sales. They are just trading. They bring in cars to sell, and go away. Many of the players are not investing in workshop services and after sales. The reason is that, maybe because, it is easier to just trade. You have your money, put it into a product, bring it in, sell it and you go away with your gain and continue the circle in that manner. Meanwhile, if you decide to invest in workshop services and after sales, when you sell the car, you must provide support services to people to keep the cars running and that is the harder part of the business.
Do you considered the poor maintenance culture by Nigerians when you thought about investing in auto workshop business?
Our dream is to become a reputable automobile dealership in the country. We are very passionate about after sales. To give customers the best service, you have to come into that party with a lot of passion and compassion and integrity. Naturally, I believe in service to humanity.
Nigerians have a poor maintenance culture and we are out basically to preach preventive maintenance. We call our customers to remind them about the 5000mile service timeline. It is very important that we remind them for them to know. When they come for servicing, we restore their vehicles to manufacturer’s standard, because many people come for servicing and they only want oil change. They don’t mind driving the vehicle with suspension problem and other issues, until the car breaks down. In doing this we are gaining ground, because we are doing it at affordable prices.
So, moving forward, what are the challenges that the government must address to achieve the desired goals in the sector?
The industry is evolving and I believe that there are still certain things that are much unforeseen, when thinking about the future. In a country where 95 percent of economic activities are based on importation, we don’t seem to have a choice than to import cars into the country. We don’t have any manufacturing plants yet and even if we bring in the major players, we don’t have any indigenous manufacturing company of high repute to say that they would contribute to solve the industry challenges. But we must continue to look forward and to look around the world for developments.
We need an organised system in the financial institutions. In some foreign countries there is a sort of consumer lending that makes it possible for College graduates, working class people, who have stable jobs, small and medium size companies, to access funds to buy cars. That is one thing that financial institutions, along with government, can come together and put in place for the young people that are out of college, small and medium size companies to have access to funding. In our country funding belongs to the high networth individuals.
Secondly, the regulation of the automobile industry in Nigeria is haphazard. We have not encouraged, at national level, the major manufacturers to come and invest in Nigeria. In many foreign countries, big manufacturers are investing by having a centred office, where all distributors belong to one umbrella organisation and making sure that distribution and access to supply and spare parts and accessories are within the reach of the people. We need that structure and that cannot really come from the government regulators.