The Nigerian automobile companies are struggling to remain in business and job opportunities in the sector are shrinking gradually.
The National Automotive Industry Development Plan (NAIDP) of 2014 has failed to record any expected success, despite the recognition of 58 companies, including those privatised by the Bureau of Public Enterprises (BPE) as automotive assemblers in full compliance with local content guidelines by the Federal Government in 2020.
The fortunes of naira against major currencies are crumbling on a regular basis.
As at May 2023, naira was N475 to a dollar at the official market, but today, it has further collapsed by 120 per cent to N1,045 to a dollar at the same market.
There are numerous automobile companies in Nigeria; indigenous (local manufacturers) and foreign (foreign assemblers) among which are Nord Automobiles Limited, Innoson Vehicle Manufacturing, Peugeot Nigeria, Stallion Motors, Lanre Shittu Motors, Proforce Motor, Globe Motors, Elizade Motors, Dana Motors and Coscharis Motors among others.
The local vehicle manufacturers are not getting enough encouragement from the government and its agencies. Rather than the government officials to patronise the indigenous vehicle manufacturing companies, they prefer the known foreign brands, while naira receives more pummelling due to additional pressures.
Also, the market of fairly used vehicles in Nigeria far outpaced that of the brand new ones. A report in the second quarter of 2023, claimed that the importation of fairly used vehicles into Nigeria dropped by 70 per cent due to various reasons, including the exchange rate.
Just about two months ago, the federal lawmakers said it was procuring luxury foreign brands Sports Utility Vehicles (SUVs) worth N57.6 billion to its 469 members; House of Representatives and Senators, even though, the cost was above the package prescribed for the lawmakers by the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC).
The federal lawmakers had rejected cheaper Sedan and Saloon cars and chose instead the expensive SUVs, in violation of the revenue package put together for them and other public office holders by the RMAFC.
The plan by the lawmakers to procure foreign brands at the expense of local vehicles received condemnation from across the country, especially auto stakeholders, but they still went ahead with their plans.
Commenting on the challenges facing the indigenous automobile companies in the country, Chief Innocent Chukwuma, the Chairman, Innoson Group, said high tariff and irregular supply of electricity have further frustrated the efforts of the automobile companies in the country.
He also mentioned lack of confidence in the automobile industry in Nigeria by the government and its officials as another challenge that the indigenous companies are battling with.
Speaking with select media recently at its plant in Nnewi, Anambra State, Chukwuma explained that with the removal of subsidy on fuel, the patronage of indigenous automobile companies was expected to receive a boost.
For instance, he explained that the company has the capacity to serve Nigeria and other regional countries through its plant.
Chukwuma explained that anyone promoting importation of vehicles would be doing so at the peril of economic growth of Nigeria.
Chukuwuma emphasised that importation of vehicles would add more pressure on naira, while the quest for foreign exchange would increase.
According to him, IVM through its plant manufactures mass transit vehicles, Sports Utility Vehicles (SUV), small buses and others, which are either Compressed Natural Gas (CNG), Liquefied Natural Gas (LNG), electric, diesel and PMS powered.
He pointed out that IVM could manufacture about 500 units of vehicles monthly, stressing that the company had the capacity to tackle mass transit challenges not just in the country, but in the African region.
“I don’t think there are challenges in the automobile industry because solutions are available. The petrol price has gone up and people will reduce their spending by using buses for work. We have natural gas to power all these buses, we can use normal gas and even if you want electric, which is through charging, we can also produce that. Our factory here can produce any brands of vehicles that you need.
“We manufacture according to demand. We are manufacturing the small vehicles now because there are demands for them. During the COVID-19 period, what we produced were the ambulances. We are here on ground and any kind of vehicles that need attention in this country, we can produce them. Now, we are producing buses in mass because Nigeria needs it now to make sure that its workers are able to go to their various offices or workshops easily.
“We have CNG, LNG, ordinary gas and fuel. Also, we have electric vehicles. We are here to manufacture vehicles for you. We don’t produce engines. What we do is to produce the body and buy the system from any company that has quality materials that we might need. The body is the same thing, what powers the motor is what you want and we can do that for you. I have the space for any brand of vehicles and we have the capacity to produce.”
Also, Mr. Olawale Jimoh, the Marketing Manager, Dana Motors Nigeria, said that the government remained the predominant customer in Nigeria’s automotive industry.
Jimoh explained that the annual sales of vehicles had dropped drastically in the country, leaving the automotive companies at the mercy of the government patronage, stressing that this was discouraging to the vast majority of the stakeholders who had invested substantially in the country’s economy.
The jettisoning of the Nigerian models by government and other organisations for foreign brands, Jimoh lamented was having unprecedented negative effect on naira, thereby leading to reduced buying powers by Nigerians.
He regretted that while other countries had supported their local industries and improve their economies, the reverse was the case with Nigeria.
He added: “South Korea can be used as a reference point where they actively promoted and supported their local automobile industry, thereby helping them to stabilise their Korean Won. By contrast, when a country heavily relies on imports, as seen in Venezuela, the local currency is bound to experience severe devaluation during economic downturns.
“In the Nigerian context, the proclivity for foreign vehicle imports not only places undue pressure on the naira, but also hampers the growth potential of the local automotive sector. A strategic shift and unflinching support for local industries could not only bolster the currency, but also foster a more resilient and self-sufficient national economy.”
Jimoh appealed to political officeholders to go beyond paying lip services to supporting the local industries, but to actually work the talks, insisting that the government had a big role to play in moving the sector forward.
He insisted that the auto industry had a huge contribution to the economy; creates a huge number of employments, contribution to the Internally Generated Revenue (IGR) and diversify the country’s economy when well-harnessed.
“The government has a pivotal role to play in facilitating an environment conducive to the growth of local stakeholders, ultimately contributing to a more robust and diversified national economy.
“It’s imperative to move beyond mere slogans and embrace substantive policies and actions that empower local industries, recognizing the crucial role they play in steering the country towards economic resilience and economic sustainability,” he said.
Also, Mr. Chris Amokwu, industry analyst, said it was pertinent for the government at all levels to look inward and encourage the indigenous automobile players.
Amokwu, insisted that the indigenous mobile manufacturing companies had the capacity to solve the mobility problem, but regretted their neglect, which he said had further added to the continuous drop of naira against major foreign currencies.
According to him, many of the local companies could manufacture gas, solar, liquefied natural gas and fuel powered vehicles, but said they lack encouragement for expansion, but said the consistent abandoning of local manufacturers and preference for foreign brands was further affecting the naira.
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