The Automotive & allied sub-sectoral group of Lagos Chamber of Commerce & Industry (LCCI) has commended the National Automotive Design & Development Council (NADDC) on the recent two percent interest reduction on loans from the NAC fund under the Bank of Industry (BoI) custody taken by some local assemblers in Nigeria as palliative to mitigate the impact of the ravaging coronavirus (Covid-19) pandemic, but insisted that, the interest support needs to be matched with the Federal Ministry of Finance in renewing the expiring and expired auto assembly licences.
While also throwing his weight behind NADDC’s extension of repayment period of the loans to auto assemblers by 90 days as part of the palliative, Bambo Adebowale, chairman of the Automotive & allied sub-sectoral group of LCCI told BusinessDay that, similar relief packages should be extended to other category players within the automotive assembly value chain as they are also impacted by the current sharp negative economic downturn.
The LCCI sectoral group chairman said auto assemblers should also benefit from the CBN announced financial interventions to manufacturing and other key sectors of the economy.
‘’We at the group however, continue to emphasize that it’s the whole auto industry that needs help to survive, not just auto assemblers. Employees and entrepreneurs including dealers, technicians, and spare parts dealers numbering over two million need support’’.
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The negative impact of pandemic on the auto industry is obvious. Cancelled motor shows, empty showrooms, inactive repair shops and non-moving inventory are all indicators. The VW Group, world’s largest auto manufacturer reported it was losing $2bn a week globally from the shutdowns and Hertz rentals, founded over a century ago and one of the largest single users of the automobiles has filed for chapter 11 bankruptcy.
An unplanned silver lining might come in the desire to socially distance, triggering the demand for individuals to drive their own vehicles, as commuters avoid public transportation, but with salaries that might be constrained, new priorities in healthcare and limited access to finance, it will likely be Nigeria’s used vehicle segment will for now, be the bigger beneficiary.
The LCCI’s Automotive & allied sub-sectoral group chairman said in the in the aftermath of COVID-19 pandemic, there will be excess auto inventories in Europe, Asia and America as auto manufacturers attempt to kick start their industries by offering sweeteners like the vehicle scrappage scheme proposed by Germany.
It means the part exchanged vehicles will likely find their way to the some of the largest used car market in the world including Nigeria where there is currently no structured plan, no articulated regulation, no comprehensive strategy to control this amid little or no support to the local industry to challenge it.
Nigeria have a $40bn industry that directly supports more than two million employees, entrepreneurs and technicians and the NADDC needs to embrace the potential engaging the ministries, departments and agencies.
These will help in articulating lasting solutions, some well documented, that will develop the auto value chain by scaling up assembly, scaling down age old vehicles and simultaneously deploying sustainable stimulants for growing the local component industry in the first instance.
While encouraging assembly, support should be given to local industries to start producing generic components like fan belts, windscreens, discs, pads and other parts that is within the category.
Adebowale suggested that once the COVID19 fall-out is dealt with first, the registered and licensed autoprenuers should receive a package of economic support for their imported automotive equipment, inventory of vehicles, components and spare parts at the ports.
NADDC should engage the shippers, clearing agents, NPA and concessionaires and the Nigeria Customs to defer, absorb or offset the various import levies and charges.
Other possible interventions can be in form of increasing “line free” and “port free” days for imports, reducing charges for demurrage, documentation and administration. The NADDC can seek easing for indirect import delivery and terminal handling charges, levies for the maritime organization of West Africa and sea protection by Nigerian Maritime & Safety Administration (NIMASA).
Once the industry gets going, NADDC will need to work with Nigeria Automobile Manufacturers Association (NAMA), Manufacturers Association of Nigeria (MAN), Nigeria Chamber of Commerce and Industry (NACCIMA), LCCI and other relevant stakeholders to agree realistic timescales for phasing out of generic auto spare parts and aggressively supporting their local manufacture.
