Despite FG’s ‘Buy Made-In Nigeria’ Campaign, Nigerians Spent N368.46bn Importing Used Cars—Investigation

…Absence Of Auto Finance Scheme Affecting Purchase Of New Vehicles—-Stakeholders

Despite the campaign by the Federal Government to boost patronage of locally assembled vehicles, Nigerians spent a whopping sum of N368.46bn importing used vehicles in six months.

The amount was spent between January and June this year by Nigerians on used vehicles popularly known as Tokunbo

The N368.46bn spent importing used vehicles is higher than the N256.09bn 2021 capital budgetary allocation of the Ministry of Transport, N198.28bn allocation to the Ministry of Power, N197.41bn to Ministry of Education and N152.77bn to the Ministry of Health.

It is also higher than N366bn capital allocation to the entire 60 government owned enterprises such as the Central Bank of Nigeria, the Nigerian Communications Commissions, the Nigerian National Petroleum Corporation and the Nigeria Television Authority among other captured in the Fiscal Responsibility Act.

The Federal Government had in a bid to revive the moribund auto industry, launched the ten year (2013-2023) National Automotive Industry Policy Development Plan in 2013, targeting $5bn investment in the sector.

The NAIDP banned, from 1st January 2017, the importation of vehicles into Nigeria through land borders to encourage investment in local vehicle production and local content development.

It is also expected to generate over 100,000 jobs and 10,000 units of vehicles annually, focusing on five key elements such as infrastructure, market growth, standards, investment promotion and skills development.

The FG also tasked the National Automotive Design and Development Council with ensuring NAIDP’s full implementation. As of August 2017, a total of 52 local auto assemblers have been granted assembly status by NADDC but findings revealed that currently, only nine auto manufacturing companies have started assembling semi-knocked down vehicles in Nigeria.

The companies, according to invstigations are Peugeot, Nissan, Honda, Innoson, Hyundai, Ford, GAC, JAC and Kia Motors.

However, it was learnt that the non-passage of the NAIDP Bill into law since its presentation to the Senate had contributed in hampering the full realisation of government goals.

Findings by THE WHISTLER revealed that the inability of the Federal Government to implement a national vehicle finance scheme and the smuggling of vehicles into the country have been hampering the projected production and market absorption of two million new vehicles annually.

Investigations by our correspondent also revealed that apart from smuggling and limited purchasing power of Nigerians, the inability of the government to pass a legislation that would support the auto policy was limiting the much needed investments into the sector as envisaged by the automotive policy.

It was learnt that about six years since the implementation of the policy, some of the local auto manufacturers are still having difficulties to scale up production due to smuggling of used vehicles and local demand for new ones.

Industry officials confided in our correspondent on Monday that the smuggling of vehicles through various land borders into the country is affecting demand for locally assembled vehicles.

For instance, a senior official in one of the auto assembling companies told our correspondent during an interview that many of the local auto firms are feeling the negative impact of smuggling because such practice is not encouraging them to produce new vehicles.

Based on figures obtained by THE WHISTLER from the National Bureau of Statistics, cars are imported into Nigeria from the United States, Brazil, Canada and other European countries such as Italy, Belgium, Germany, Netherlands and Canada.

Analysis of the trade statistics showed that in the first quarter of this year, the sum of N190.57bn was spent by Nigerians on used car importation.

Out of this amount, import from the United States accounted for N123.65bn, Italy N5.79bn, Belgium N4.42bn, Canada N3.77bn and Germany N3.38bn.

Similarly, in the second quarter of this covering April to June, Nigerians imported used car worth N177.89bn.

A breakdown of the N177.89bn showed thatUnited States accounted for the highest source of vehicle importation into Nigeria with N116.02bn.

This is followed by Netherlands with N28.45bn while Brazil, Italy and Canada recorded N24.65bn, N4.56bn and N4.18bn respectively.

Speaking on the impact of imported cars on commercial viability of setting up local assembling plants, a manager in one of the major auto firms in Nigeria said the development was worrisome.

The Manager who pleaded not to be named as he was not officially permitted to speak on the matter said, “Many of the local auto companies are feeling the negative impact of the activities of importers of used vehicles.

“How do you encourage an investor who has invested heavily in setting up local assembling plant in Nigeria with a high operating cost to produce vehicles that would compete in terms of pricing with those used vehicles that are imported into the country?

“We have advocated that there is need for government to completely stop the importation of used vehicles, provide adequate support for auto firms to set up vehicle assembling plants in Nigeria, then come up with a solid vehicle finance scheme and you will see how the sector would add value to the economy through job creation, poverty reduction and economic development.”

The Chief Executive Officer, Stallion Group, Mr Anant Badjatya, said the inability of Nigerians to buy new vehicles was worrisome.

The Stallion Boss said it was worrisome that only 10,000 new vehicles with a total value of N4bn were sold in Nigeria annually.

He described a situation where a population of over 200 million could only demand for 10,000 new vehicles in a year as embarrassing, adding that in India, 10,000 new vehicles could be sold in just two days.

He commended the Federal Government for the closure of the border, adding that the move would have significant impact on the auto industry.

He said, “We have 200 million people in Nigeria buying 10,000 new cars in a year, this is an embarrassment. It cannot be.

“In India, we sell 10,000 new cars in two days. Nigeria can do much better.

“At Stallion, we have invested N130bn in this industry. We have the largest assembly plant in West Africa that can assemble 200,000 cars. We are not doing anything; we are assembling just about 4,000 cars now.

“We need to generate employment and this border closure is coming at a fantastic time for us. I commend the government for this action.

“It is a very tough decision to close the border but we have to go through this pain today for a better future.”

The Director-General, Nigeria Automotive Design and Development Council, Jelani Aliyu said the agency was working towards having a vehicle finance scheme for Nigerians to acquire new vehicles.

Already, he said the NADDC had reached an understanding with three banks for the loans to be given to eligible Nigerians after they must have deposited ten per cent of the cost of the vehicle.

The banks are Wema Bank Plc, Stanbic IBTC Bank and Jaiz Bank Plc.

The NADDC DG said that the loans would be provided by the banks to Nigerians at a single digit interest rate of eight per cent.

He said, “We are working with three banks-Wema Bank, Stanbic and Jaiz Bank to offer vehicle financing at a single digit interest rate. We ‘ve reached advanced stage.”

The DG also said that the government is also encouraging auto manufacturers to continue to increase the level of their investments in the country.