Stakeholders seek review of automotive policy, flay inaction

The nation’s automobile industry has been reeling under the pangs of harsh operating environment, just as the bottom-line of the sector’s listed equities, since 2015, remained subdued, with gloomy outlook, due to policy challenges.

While at the global level, the automobile industry has shaken off the effects of the global financial crisis, Nigeria has continued to pose policy and infrastructure issues, which turn up, on consistent basis, tough operating environment.

The small and medium sector operators have also been squeezed by the poor economic conditions, as they now go for the fairly used vehicles that are seemingly less expensive, causing Nigeria’s auto industry, unlike its counterparts in other countries, to face challenges that retard its growth potentials.

Stakeholders in the automotive sector have decried the position of government towards implementing the National Automotive Industry Development Plan (NAIDP) fully.

Besides, they argued that Federal Government’s inaction towards the automotive policy is slowing down the desired potentials the sector possess in developing the nation.

Hence, they called for a holistic review of the plan to include reflecting some of the realities and developments its implementation has thrown up, to ensure that it achieves the desired ends.

The NAIDP, otherwise known as auto policy, was launched in 2013, under the Goodluck Jonathan-led administration. Its major thrust is to encourage local manufacturing of automobiles by offering protection/incentives to potential and existing local investors, while at the same time, discourage importation by raising the bar against all those who will rather export to Nigeria.

Through the automotive policy, the Federal Government realised the importance of the sector to the industrial development of the country. With inputs from the Nigerian Automobile Manufacturers Association (NAMA) and other organisations involved in the industry, the automotive policy for Nigeria was drafted and subsequently received presidential approval.

The basic elements of the objective, among others, were provision of automotive vehicles for urban and human areas; accelerated technological development of the Nigeria economy; increased employment opportunities; conservation of scarce foreign exchange; establishment of integrated Automotive Industry in Nigeria; as well as standardisation and rationalisation of the Nigeria automotive industry.

Few years after the introduction, the few vehicle-manufacturing plants have been able to survive the harsh operating environment while many others that do not have the wherewithal gradually went underground.

Auto dealers and operators of auto assembly plants have continued to bemoan the poor implementation of the policy and consistently called for its review.

However, the endless delay of review of the policy is creating a challenging market scenario for industry operators who lamented that the situation is going from bad to worse.

Indeed, the billions of naira invested in setting up vehicle assembly plants are being threatened as players said government’s poorly planned automotive policy lacks proper implementation.

While reacting to the import of used cars from China to Nigeria, the Chairman, Motor Vehicles & Miscellaneous Assembly Sectoral Group of the Manufacturers Association of Nigeria (MAN), Dr. David Obi, decried the refusal of President to give assent to Nigeria Automotive Industry Development Plan {NAIDP} Fiscal Incentive and Guarantees Bill, arguing that the Chinese are simply taking advantage of a loophole resulting from the lukewarm implementation of the auto policy.

“One of the many implications of a legal framework for the policy and the imminent invasion of Chinese ‘tokunbo’ vehicles is that many renowned original equipment manufacturers (OEMs), who are afraid to invest in Nigeria because of our usual policy summersault, will remain reluctant because there is no assurance that their investments will be protected.

“It is also very ridiculous to hear the argument that tokunbo vehicles are not on the import prohibition list and therefore should be allowed to freely come in as long as they are not old. The emphasis should rather be on the loss of jobs resulting from the present inactivity in the auto-manufacturing sector.

“And there is no way the situation will improve if we continue to allow used vehicles to flood the country while we take one step forward and two steps backward with the auto policy.”

They advised the Nigerian government to take a cue from the United States of America, which has been locked in a trade war with China over the need to protect American manufacturers and their products from the invasion of imports from the Asian country.

Chairman, NAMA, Adetokunbo Aromolaran, said the policy was set aside to discourage the importation of used cars into the country and to promote the automotive sector thereby making Nigeria a producing nation.

The NAMA boss who is also the Managing Director, VON Nigeria, however, indicated that the country needed to focus on infrastructure, adding that the roads are bad and with the rain, it has become even difficult to get the goods across, while power supply is not improving. He noted that full implementation of the policy is what is required to make the auto industry vibrant again.

“If we are able to implement the policy properly, it will help local assembly plants to grow and prices of new cars will come down as we will produce in large quantity.

Aromolaran who decried the full implementation of the policy said: “It has to do with the fact that all the various tyrants issues are not being applied, as the policy is that you see what some institutions fail to realise is that those steps were not taken for nothing. They were taken for a purpose within the government instances of what every other nation that developed without the industry to be able to develop it over time.”

Principal Partner, Media Advocate Limited, Manny Philipson, said the automotive policy should first persuade the government to discourage second-hand car imports and sales. Thereafter, the individual and fleet vehicle owners should be thoroughly educated on the benefits of a new car purchase and the significance of regular maintenance, which is currently not viewed as a priority and sometimes exacerbated by lack of service outlets.

Philipson said the sales and aftersales network should also be strengthened simultaneously to reach urban and rural areas alike to ensure greater brand visibility and accessibility to service, parts and accessories, if we are to break the used car market monopoly.