Auto policy must prioritize industry, national and consumer interest
To many stakeholders and original equipment manufacturers (OEM)s, the delay in cleaning up Nigeria automotive policy has remained a huge drawback for any meaningful investment into the sector that can contribute towards the growth of the counytry’s gross domestic product (GDP) and the generation of employment.
In this interview with THOMAS PELLETIER, managing director/country delegate of CFAO Automotive group, told MIKE OCHONMA, BusinessDay’s transport editor that Nigeria is not yet ready for electrical vehicles.
He also advised the federal government to be strongly committed towards giving the citizenry a legally binding and functional automotive policy, restoration of some level of confidence among local auto assemblers and the buying public and providing a very conducive economic climate for businesses to thrive.
In 2019, there was apprehension that, the Federal Government may have finally suspended the automotive policy initiative by the former administration of Goodluck Jonathan. What are your views about that
The Automotive policy has so far not been very successful so reviewing it, in my opinion, would be a good move.
However, the next steps are vital: who will be the stakeholders involved in this review? They will need to put the interest of the industry, the national economy and the interest of the consumers at the center stage.
Some stakeholders have already started regretting their investments in the sector, particularly as it concerns assembly plants considering what they have invested in it. How is this policy affecting your organisation. Are there regrets from your partners; that is the Manufacturers and the CFAO group
I have not seen major investments in the Nigerian automotive industry. For some so-called investors, the objective was to benefit from government incentives. In CFAO’s case, we successfully set-up our Mitsubishi Fuso assembly plant which has been awarded the Q-release from FUSO, for the level of quality.
On the other hand we do not assemble passenger cars and pick-ups because the manufacturers were not convinced by the local auto policy and the market environment.
We do not regret our investment but we look forward to being included in future discussions on the auto policy as we feel we can contribute to a successful improvement.
Vehicles sales have dwindled abysmally in the local market. Do you foresee any improvement in the nearest future and what are those indices or things that should be put in place to actualise it
Unfortunately I foresee no improvement in the nearest future. Prices of new vehicles are beyond the reach of a majority of Nigerians. At the same time, age and condition of imported used vehicles is deteriorating. All these have visible impacts on the environment, road safety as well as traffic situations.
To make a positive change and remedy the current situation, the Government needs to reduce the import tariff and create an enabling environment for vehicle financing especially to Nigerians.
With the challenges that Nigeria is facing presently, how best do you think the country can key into the evolution of electric cars which is the trend globally
Talking about electric cars in Nigeria would be a bit premature considering the current shortage of electricity supply. It would make no sense to plug an electric car into a generator. The rationale behind introduction of electric cars is to reduce emissions level, which is a major health issue. To tackle emissions, the first thing should be to limit the age of vehicles imported to Nigeria and ban the importation of accidented vehicles as it is done in other west African countries.
If these measures are put in place, I believe emissions would reduce overtime. Electric cars may also be introduced as Nigeria gradually fixes its electricity challenge.
There are plans to redesign the auto policy with adequate stakeholders’ input. What steps do you think the Federal Government will take to achieve a good policy framework
The question we should ask is what the Government’s ambition is for this automotive policy. If the ambition is to become a hub, create jobs and gradually move to Completely Knocked Down (CKD) operations, then the stakeholders should be the car manufacturers, also called OEM’s. They are in the best position to make recommendations to the Federal Government and this would require a holistic approach with mid-term and long-term objectives.
Investment climate and Ease-of-Doing-Business (EoDB) are critical issues in attracting investments in Nigeria. What areas would you like FG to address in the automotive sector that will make Nigeria competitive to attract investment into vehicle manufacturing in the country
Logistics is a major issue and the cost of ‘the last kilometer’ is extremely high. Clearing a container from Apapa to a warehouse in Lagos costs more than when we are shipping the container from Asia to Lagos. Importers face a lot of bottlenecks when it comes to clearing goods.
Road infrastructure is another problem that needs to be sorted in order to create a more attractive environment for investment.
As I said earlier the automotive market volume is extremely low. In order to boost the market, it is necessary to align customs tariff of new vehicles to the one of used vehicles. Prices of vehicles will then become more affordable and demand will increase.
As we speak, Nigeria’s new car market size is almost at par with Côte d’Ivoire and Ghana which is a complete abnormally. We should restrict the age of imported cars, ban importation of accidented vehicles then provide financing structures so that more Nigerians can buy new cars.
I also encourage new vehicle buyers to patronize official dealers as opposed to grey dealers. By doing so, they will enjoy the full benefits of buying a brand new car : vehicle adapted to local conditions, manufacturer’s warranty, access to recall campaigns, etc. Grey dealers sell products that are meant for other territories and do not fit the Nigerian market conditions. More so they are excluded from the Manufacturer’s maintenance program. For example, in case of recall campaign on airbags or brakes, the customer will not be informed, the vehicles will not be rectified and will become a risk to not only the vehicle driver but also the public.
As a key player in the automotive sector, what are some of the policies and programmes you wish government to specifically implement to attract investments in the local content sub-sector of the industry
If you want manufacturers to put their logos on cars manufactured locally, their major requirement is for all the components to meet their standards.
The first thing to do is to convince the Original Equipment Manufacturers (OEM’s) to come and invest in Nigeria. That will create an ecosystem where other local players can join. This is the case in Morroco where OEM component manufacturers are setting up businesses to support the local OEM’s manufacturing cars. This will aid local content development, create lot of jobs and ease transfer of technology.
So to get the OEM’s in, FG needs to review and implement the auto policy as proposed earlier and ensure the market growth becomes attractive for them to invest.
If you are no longer the managing director of an automobile company tomorrow in this country, what would you wish the Nigerian Government to do in order to position the automotive industry on the right pedestal
If I am the managing director of CFAO Automotive today or somewhere else tomorrow, my opinion will not change. The Federal Government needs to clarify their position. CFAO has been in Nigeria for 117 years which means that we are here to support the Federal Government in its quest and vision of making the Country a leading manufacturing hub and industrial giant in Africa.
What is your position on aftersales service delivery among automobile dealerships in Nigeria as it affects customers’ satisfaction vis-a-vis your experiences in other countries where you have served
The number of counterfeit parts in Nigeria is a major concern. Though I don’t have access to precise data, I believe that a large share of parts sold on the local market are counterfeit.
Maybe the players don’t really educate on the benefits of genuine parts. People want to get their cars fixed at the lowest possible price and are not particularly bothered about the consequences.
When a counterfeit brake pad purchased at a low price is installed in a car, it will eventually damage all other brake components creating more damage to the user which is very dangerous.
There is a real issue with the maintenance culture. If customers are properly educated on warranty periods and recall campaigns, this would retain more customers in our authorized workshops. Even though this is coming at a premium, the customer would be paying for genuine parts, peace of mind and improvement in the lifespan of his car.
CFAO is doing a lot to improve customer care and ensure the customer has a good experience whenever they visit us.
What percentage of fake spare parts do you think is sold in the local market and why the huge is price differential between the open market and the dealership
Although unverified, the estimated figure is about 90%. There are definitely lot of counterfeit parts in the market. The price differential can be explained by the quality of parts, the logos of the brands which come at a cost.
We also have independent aftermarket parts which are parts manufactured by the OEMs and come at a lower price for equivalent product quality.
Some customers after the warranty period move to independent aftermarket spare parts for the maintenance of their vehicles which reduces the cost.
CFAO recently started importing and distributing independent aftermarket spare parts across Nigeria through parts dealers. This would be followed up with proper education on the value of genuine and quality parts.
Recently CFAO group opened a multi-brand workshop in Abuja in collaboration with Total and some dealers. What is the reason for the new business thinking? Are we going to see a replication of that in other parts of the country?
Autofast is the retail leg of our parts business. It is a multibrand quick-service franchise we put in place in partnership with Total Nigeria PLC across their Nigerian network. We started off in Abuja in 2019 and will be expanding with additional stations in Lagos this year.
Autofast is a tripartite agreement that also included the dealer of the filling station.
We are offering quality service at a low price. For example, a standard Toyota Corolla brought to Autofast for an oil change will have 35 points checked on the vehicle which includes brake fluid, battery, tyres and others. All this will be done in less than one hour at the cost of N8,500 only.
The service centres are open from Monday to Sunday to make it accessible to the largest majority. Though it is a multi-brand initiative, we are clear on the fact that new cars are to be maintained with the official distributors during the warranty period.
Autofast is here to address the quality and maintenance issues on vehicles in Nigerian roads. The majority of cars on the roads are ‘tokunbo’ and we are striving to tap into this market to bring quality and good customer care to Nigerians at very competitive and affordable prices.