Reprieve appears underway for car dealers and buyers following plans by the Federal Government to review its import tariff on vehicles. This is expected to bring down the cost of new vehicles and increase the tempo of business in the nation’s automotive sector.
Sources at the Federal Ministry of Industry, Trade and Investment gave the indication on Sunday that the current 70 per cent tariff on imported cars could get a downward review as a way to force down the prices of vehicles.
Although the National Automotive Design and Development Council, an agency under the ministry, said on Friday that 14 out of the 25 registered automakers had started assembling vehicles in the country, Nigerians have yet to enjoy the expected benefits of the new policy as the prices of vehicles are still high.
“It is likely to come in the form of a review of the import tariff on vehicles so as make it easy for people to buy new cars. The decision on the entire auto policy is expected to be part of the economic policy of the government, which will be unveiled as soon as the new ministers settle down,” one of the sources said.
Car prices were increased last year by about 60 per cent shortly after the import tariff went up from 22 per cent to 70 per cent, a situation, which made it difficult for many to buy new cars, just as fleet buyers such as corporate firms have had to cut down on the number of vehicles purchased.
The imposition of the new import tariff, which also affects imported used vehicles, according to the government, is to encourage local assembling/production of vehicles, with the attendant benefits of creating more jobs and boosting the nation’s economy.
A zero per cent was announced as tariff on imported vehicle components (Completely Knocked Down units) and auto assemblers are also allowed to bring in fully built vehicles at very low import tariff.
But some stakeholders, including major dealers such as Toyota Nigeria Limited, had complained about the timing of the policy and the seeming poor state of the needed infrastructural facilities for the sustenance of local assembly plants.
The Chairman of the automotive group, Lagos Chamber of Commerce and Industry, Mr. Oseme Oigiagbe, confirmed that the group had written to the Presidency and suggested a number of proposals on the implementation of the auto policy, and recently participated in some meeting sessions called by relevant government agencies/officials on the issue.
In an interview with our correspondent, he specifically called attention to the issue of unstable power supply and the commencement date for the new import tariff as contentious issues that needed to be urgently reviewed.
An auto expert and consultant, Dr. Oscar Odiboh, said the review of the tariff was expected, arguing that it was hurriedly put in place by the last regime and should, therefore, be suspended.
“The high tariff (on imported vehicles) should make itself necessary; it should not be forced down on the people. It should be suspended and introduced in phases – one to a five-year period,” he said.
Odiboh, who is the Managing Director, Newsletters Nigeria Limited, however, said the auto policy was a necessity for the development of the nation’s industry and the good of the economy.
“The project will take Nigeria from a lower stage to the next level and sit us among top economies of the world,” he stated.
But he warned that unless the implementation of the policy was made systemic and allowed to follow due process, it could derail the project.
He said, “Since this government says it has come to change things, it must change the policy. It is not a yam and beans policy. You must give people time.
“It requires certain basic things to be put in place. Power is necessary. There are other infrastructural facilities that will make the system run efficiently. Those things must be in place before enforcing the import tariff.”
Odiboh alleged that some firms had obtained the auto assembly plant licences to enable them to bring in fully built vehicles at low tariff and labelling those vehicles as being locally assembled.
But the Stallion Auto Group, currently assembling Nissan, Hyundai and Ashok Leyland brands of vehicles, and Dana Motors doing the Kia vehicles locally are optimistic that any review of the auto policy will not in any way affect their plants and business operations in Nigeria.
For instance, the Managing Director, Stallion NMN Limited, Mr. Parvir Sighn, said, “As far as the group is concerned, we have no doubt that the government will sustain the policy. Anywhere in the world, the automobile industry is a high contributor to the Gross Domestic Product. It is also a significant employer of labour. The state of the auto development of a nation is a reflection of the development of that country.
“The policy will be sustained. There is no shortcut to it. You need a robust industry to support the high demand for vehicles in the country. The demand is there.”
The spokesperson for Kia Motors Nigeria, Mr. Olawale Jimoh, said the company had in conjunction with its technical partners, Kia Motor Corporation, invested billions of naira in the local assembly plant and had in the process created jobs for Nigerians.
The government said the response of the automakers to the auto policy, particularly the call for the establishment of assembly plants in Nigeria, had been overwhelming.
Indeed, the NADDC said on Friday that the “response to the policy so far has exceeded our expectations.”
This must have prompted the Director-General of the NADDC, Mr. Aminu Jalal, to announce the suspension of licence issuance to new auto assembly plants.
He said the decision was taken to enable the council to set up some test centres that would “ensure that imported vehicles and components meet international safety and environmental standards.”
But the LCCI said the 70 per cent tariff on imported cars would bring about a higher transport cost.
The President, LCCI, Alhaji Remi Bello, said in a statement, “Vehicle ownership will be put further beyond the reach of the Nigerian middle class, especially in the face of poor credit access and high lending rates in the economy.”
He called for the development of ancillary industries for the production of batteries, glass, radiators, tyres and other vehicle components as well as affordable finance for the investors.
The LCCI president stated that the auto industry should be predicated on strong engineering infrastructure, including the production of flat sheets, foundries and fabrication of components needed in vehicle production.
When contacted, the Special Adviser to the President on Media, Mr. Femi Adesina, said he had no information on the auto policy, while the Special Assistant on Media to Vice President Yemi Osinbajo, Mr. Laolu Akande, promised to get back to our correspondent on the matter but never did up till the time of filing this report.