Stakeholders bemoan Chinese plan to import used cars to Nigeria

Auto dealers and stakeholders within the automotive industry have bemoaned the plans by Chinese government to export used cars into the country.

The move, according to them could impede Nigeria’s effort to resuscitate the automotive industry and ultimately put undue pressure on the already overstretched demand for foreign exchange (forex).

Besides, they opined that the plan would make price competitiveness fairer as the Chinese is known for rational pricing, although there were concerns that the country could be used as dumping site for used vehicles.

With all the focus on electric and self-driving cars, it is easy to overlook just how big and influential the market for old-fashioned vehicles remains. In developed economies, more than twice as many used cars are sold as new ones. For example, there were 17.3 million new vehicles sold in the U.S. during 2018 and 40.2 million used ones.

Centre for Science and Environment (CSE) had reported that the United States (U.S.), Japan and European Union (EU) countries had for years been dumping old, used cars on nations such as Nigeria and Bangladesh.

The used vehicles, which should have been scrapped under domestic regulations, are instead dumped on developing nations where they contribute to carbon emissions, said CSE, a New Delhi-based think-tank.

Speaking on the development, Head of Corporate Communications, PAN Nigeria Limited, Haroun Malami, told The Guardian that for every used car imported into Nigeria, the country loses skills, jobs and revenue.

Malami said Morocco has increased up to 70 per cent tariff on used cars and about 100 per cent on fully assembled vehicles forcing original equipment manufacturers (OEM’s) to open plants in an industrial area of Morocco, hence, providing jobs for youths and revenue for the government. Morocco is expected to assemble one million vehicles in 2020 with 1.5 million jobs and 10 billion Euros in revenue.

He said Nigerian’s psyche needed to change on purchasing used cars, adding that industry leaders and stakeholders should call for immediate review and implementation of the Nigerian auto development plan to enable Nigerians see value in assembling vehicles and huge opportunity for youths and the economy.

Chief Executive Officer, West Atlantic Cold-Chain and Commodities Limited, Henrii Nwanguma, said Nigeria has been trading in used cars for decades, saying that there is nothing the Chinese entry into the business would do that is not already happening with the traditional car importation from countries in Europe and North America.

The only concern according to Nwanguma, is to make sure if the vehicles are converted right-hand drive vehicles that the conversion was properly done and ensure all the other extant standards are conformed to.

“As for the Chinese brands, they are already selling as brand new here as the European and Asian brands. This move will force prices down, as we know the Chinese are usually very competitive in pricing. Unless for protectionism and all second-hand and new card from all sources are equally treated, I think Nigerians will get the best of this entry in my opinion.

Speaking on Nigeria becoming a dumping site, he said: “Until we see what prices those vehicles will be going for, it’s a bit too early to make such comments. Let’s not get into scaremongering. That is the reason I said all vehicles irrespective of source should be treated equally.

“If the policy is protectionism then let’s be clear about that and not only respond because the Chinese are in on a very lucrative global trade. Even if we were to ban all second-hand imports, are our brand new cars affordable to the generality of our populace? We should be focusing on things that will give us a competitive economy, not just stopping imports because Chinese are taking advantage of the imbalances,” he added.

The China’s Ministry of Commerce had reportedly announced in a statement that it would soon begin the exportation of used cars to Africa, Asia and Europe, with Nigeria as one of the major destinations for the first batch of 300 cars.

It said that the first batch of the 300 exported used cars, with a total value of $2.5 million, comprised Land Rover, Toyota, Hyundai, Volkswagen, Trumpchi, King Long, Yutong, Zhongtong and WOHO brands and they are being taken to destinations that include the Lagos port (Nigeria), Sihanoukville Autonomous port (Cambodia), Rangoon Port (Myanmar) and Vorsino and Saint-Petersburg ports (Russia).

Dean, School of Transport, Lagos State University, Prof. Samuel Odewumi, revealed that there is nothing spectacular in the plan.

Prof Odewumi said the main issue will be price competitiveness with those from the West. There will be the sentiments that it makes us a dumping ground for the East. “But the fact is that is what we are. And that should be the least of our worries. When an economy has nothing of secondary value for the world except raw materials and crude oil, then those who have something to offer will automatically fill the vacuum,” he added.

The Don said: “We should focus on producing what is within our technical capacity. What on earth is preventing us from producing our own Okada and Keke Marwa. Just imagine what employment that will generate and what volume of foreign exchange that will save for us. A Marshall plan should be immediately put in place to roll out these two most commonly used vehicles within the shortest possible time.”

He said government should set proper transport agenda for the states and the nation in general. “Let’s have cheap road making and repairing techniques, skills and locally formulated aggregates to tackle our inner roads construction and repairs which can put a lot of idle youth to work. I expect Lagos to spear head this for the nation.”

Principal Partner, Media Advocate Limited, Automotive Resource and Marketing Communications Company, Manny Philipson, said the fact that the Nigerian economy is currently indebted to China by way of loans and grants shouldn’t make the country a dumping ground for Chinese unserviceable vehicles.

Philipson noted that the country has had enough of such jalopies from Europe and the Americas despite the immeasurable consequences of such imports by way of environmental pollution and degradation; demise of local manufacturing concerns, job losses and economic servitude.

“Already, the automobile market is saturated with serviceable vehicles from Europe and the Americas, so much so that they impact negatively on recent plans to kick-start a new policy for vehicle assembly in Nigeria.

“Any attempt to heed the call of the Chinese Ministry of Commerce to railroad used vehicles valued at $2.5 million to Africa, Asia and Europe including Nigeria as its major destinations could impede previous efforts to resuscitate the automotive industry and ultimately put undue pressure on the already overstretched demand for Forex. The earlier Nigeria jettisons the idea, the better for her economy. Nigeria shouldn’t be a pawn in the hands of its lenders.

He said given its international obligation as a signatory to the Kyoto Protocol through the adoption of the policy on Climate Change, Nigeria should be constantly reminded that it has a duty to ensure the reduction of human induced atmospheric carbon emission to a level that will prevent dangerous interface with the climate system, of which vehicular emission is particularly culpable.

Nigeria has put in place an auto policy, although widely criticised, which is meant to reduce the importation of used vehicles. However, the success and sustainability of such a policy in the face of hyper-inflation and poor purchasing power remain to be seen.

Experience has shown that Nigeria usually turned out to be a dumping ground for a variety of banned products. Given its preference for used vehicles over brand new ones due to very poor purchasing power of the masses, it stands at a higher risk of dumping when other countries eventually phased out the use of conventional fuel cars.

However, aside the aforementioned, the implication of the move to Nigeria will continue to contribute more environmental hazards from carbon emission, air pollution amongst others.