• Monday, May 20, 2024
businessday logo

BusinessDay

Nigeria’s new auto policy drops import by 20%

The implementation of the nation’s new auto policy may have started yielding fruit, as importation of new vehicles into Nigeria dropped by 20 percent in the first six months of this year (2014) according to some auto makers.

The development, it was gathered, was on  account of the raising of import duties on new vehicles from 20 percent to 35 percent.

Business Day gathered for instance,  that with Nigeria as an auto market of 50,000 new vehicles a year, the implementation of the policy has reduced importation of new cars by 5,000 units.

Analysts said yesterday, that the country stands to gain from the conservation of foreign exchange if government implements the policy with transparency.

According to them, the expectation of Nigerians is that the figure should drop to the lowest minimum and if possible, we should rely completely on locally made automobiles.

While the new automotive policy which came into effect in 2013 seeks to encourage interested foreign car makers to set up assembly plants in Nigeria, the federal government, through the National Automotive Council is also encouraging local auto component makers with loans that would fast track the development of feeder materials to boost local assembly.

Meanwhile, there are indications that Toyota Motor Corporation of Japan is exploring the possibility of producing vehicles in Nigeria.  Although details are still sketchy as at the time of filing this report, it would be recalled that last month, Johan van Zyl, president and chief executive of Toyota South Africa Motors, stated that the move had been prompted by the imposition by Nigeria of higher tariffs on imports of new vehicles into the country.

Van Zyl said Nigeria was not a big market for new cars at this stage but it was a big country with a huge population and a big economy in Africa, which meant Toyota could not ignore it.  “From a Toyota point of view, we evaluate every opportunity and every country on its own merits, in terms of whether it’s viable to produce there or not.” He said.

On the time frame of possible vehicle production in the country, the company chief executive said the decision on whether the automaker would invest in another country like Nigeria is not a Toyota South Africa decision, but a decision by the parent company Toyota Motor Corporation, Japan.

On the possibility of local auto manufacture in the country affecting  South Africa as the export hub to sub-Saharan African countries, Van Zyl said he did not believe the government’s support for Nigeria would undermine South Africa’s vehicle manufacturing industry and the objectives of the Automotive Production and Development Programme (AODP) of the country.

If the Nigerian government decided it wanted to establish a motor industry, it would do so with or without South Africa’s support, he said. He also did not believe the supply of  semi-knocked-down (SKD) vehicle kits to Nigeria would undermine its own product, stressing the option was to either lose the volume completely, or supply the kits.

He said that if the kits were produced in South Africa, it was still value that was created and there was also value  created in Nigeria from the assembly point of view, so overall intra-Africa trade can be promoted on that basis.

Ian Nicholls, vice-president of operations at General Motors South Africa (GMSA),  also confirmed that the new regulations and much higher vehicle import duties in Nigeria meant  foreign carmaker companies must consider  to do some level of assembly locally to compete effectively and GM would have to rethink its plans in that country.

Mike Ochonma