Automotive industry: Transformation unfolds in Nigeria

The automotive industry in Nigeria is undergoing a transformation aimed at making the country an automotive hub in Africa. Recently, Honda Automobile Western Africa Limited launched the first unit of HR-V assembled in Nigeria and this was a result of a deliberate policy initiated by the present government to reduce importation of cars and increased the volume of locally manufactured cars.

One of the deliberate policies was the ban on the importation of automobiles through the land borders to curb smuggling, especially used cars from neighbouring countries. Data from the National Automotive Design and Development Council (NADDC) show that Nigeria spends about N2.88 trillion ($8 billion) on the importation of about 300,000 to 400,000 cars annually. Nigeria produced about 140,000 cars in the 1970s before downturns in the Nigeria’s oil sector forced local production down to zero.

To reverse overdependence on imported vehicles, Nigeria slammed 70 per cent import duty and levy on imported cars to discourage importation of cars and encourage domestic production of automobiles in the country.

 This has led to a jump in the volume of locally assembled and even manufactured vehicles, including the development of an indigenous auto manufacturing company, Innoson Motors. At the recent launch of the first unit of HR-V assembled in Nigeria, the Lead Sales and Marketing Manager of Honda, Remi Adams, said the launch of the product is an indication of the company’s support for the automotive policy.

“All the assemblers, for now, are at the level of Semi Knocked Down, SKD 2 level. The local content from the point of view of Honda is more on the area of transfer of technology. A lot of Honda team came down from Japan to train Nigerian men, from the body of the vehicle to the engine were all assembled here in the country,” he said.

One of the transformations going in the automotive sector is the deliberate government policy to empower Nigerians to buy brand new cars.

The absence of a vehicle credit finance scheme forced many Nigerian workers to buy relatively cheaper used cars.

Speaking after a road show on locally assembled vehicle in Abuja recently, the Director General of NADDC, Jeleni Aliyu, said that it is finalising terms on a vehicle finance scheme that would see an increase in purchasing of locally made vehicle by Nigerians.

The NADDC boss said the council is making plans with Stanbic IBTC, WEMA and JAIZ Banks to enable working class Nigerians purchase vehicle without 100 percent out of pocket payment. The flexible auto purchase credit scheme would be disbursed at single digit interest rate, the Council revealed.

“The initiative would aid the easier purchase of vehicles by Nigerians, while also enabling the growth of the Nigerian auto-policy which places a high premium on locally made vehicles as well as a finance scheme that makes a purchase of vehicles easier for Nigerian consumers,” he said. The NADDC boss said Nigeria needs to have the National Automotive Policy become a law as it is a set of fiscal incentives, which has been developed to support local production of vehicles.

 He said most of the challenges of the automotive sector in Nigeria will be addressed when the Nigerian Automobile Industry Development Bill (NAIDB) becomes law and the goal is to develop automotive test centres, automotive industrial parks, local manpower and an automotive industry that will be Africa’s hub. “We are in the process of developing what we call the automotive centre of excellence.

 This will be a centralized institution here in Abuja. We are working with PAN to develop this centre, where anything and everything automotive will be bought,” he said.

He said NDDC is talking to development finance institutions about automotive financing in which Nigerians should be able to put in 10 per cent or less and pay over a number of years at just 6 to 8 per cent as oppose to 28 per cent interest rate.

“This will spur local capacity and support the production of vehicles in the country,” he said.

Daily Trust