Auto assemblers blame FG as more government-approved vehicle plants go down

Stakeholders are worried that majority of over 60 automobile assembly plants licensed by the Federal Government over a period of nine years since the introduction of a new auto policy in Nigeria have been forced to close shop.

Precisely, Deputy Managing Director of CFAO Motors, Mr Kunle Jaiyesimi, said recently that only six of the registered auto assemblers are still running, working haphazardly.

Indeed, he said his company, CFAO Motors, which invested heavily in setting up a world-class Mitsubishi assembly plant in Lagos to churn out the brand buses and trucks had today converted the edifice into after-sale service centre.

The hope was high that Nigeria was on the path of total transformation in 2013 when the auto policy was introduced under the Goodluck Jonathan administration. The target was that the country was about to become the hub of West and East African auto industry producing new vehicles not only for Nigeria’s teeming population and high need to supplying to all the West and East African countries.

Minister of Industry, Trade and Investment, Otunba Adeniyi Adebayo, said ahead of 2020 Argungu fishing festival and motor rally has that following the launch of the Nigeria Automotive Industry Development Plan ( NAIDP) in 2013, about 62 companies had been registered to assemble vehicles at both SKD and CKD levels, with a total installed capacity of 423,790 units.

But that enthusiasm, according to automakers, has thawed away and replaced with frustration and regrets.

Even Adeniyi gave the running plants could only boast of actual assemblage of 10, 343 units, a far cry from the target of 400,000 units annually.

Executive Director, Nigeria Automotive Manufacturers Association, Remi Olaofe, speaking in Abuja at a recent Auto CEOs Forum, said there was no way the local auto assemblers could break even without any serious support and patronage from the government.

“Nigerian auto operators are doing their best but they are not being encouraged at all. No single tyre is being manufacturer in the country since the exit of Dunlop and Michellin. How do we bring them back? What do we tell them? Nobody is in business to make losses. I do business to make money, not on sentiment.

“Many have invested billions in this auto business and we are not doing anything to support and keep them in business.”

Olaofe accused the Nigeria Customs Service of being “a pain in the neck of this business,” adding that they had practically ruined the business.

“Look at all the auto assembly lines of the plants in the country, they are virtually idle. People are allowed to cut corners and play the trick of winners take all and many are shut out. Nigeria ultimately loses. We don’t have correct industry data because of unhealthy rivalry in the business,” he said.

He also said, “The NADDC will not allow NAMA to function because NADDC is deriving pleasure in assemblers coming directly to it for aid. The Ministry of Finance will not allow NAMA to work because it wants operators to come to them individually with their problems so they could be ‘appreciated’.

“Look at Rwanda, they have overtaken us. What is the population of Ghana? It is now the toast of auto manufacturers and allied products’ investors. Every single auto assembler now is on its way to Ghana. “There is no need lying to one another. If we must develop the nation’s auto industry, we should do so genuinely.”

Chief Executive Officer, Nord Automobiles Limited, Oluwatobi Ajayi, maintained that the nation’s approved plants had the capacity to produce sufficient number of vehicles to cater for its immediate need only if there would be continuous patronage, duty rebate and tax holiday.

For instance, he said his assembly plant currently producing five vehicles per day could increase the number to 25 vehicles with the right support and raise it further to 50 per day with two shifts of operation.

The operators at the Abuja forum accused the Federal Government of failing to sign the enabling auto bill into law to support the business.

They also claimed that the Finance Act of 2020 introduced by the FG that reduced import duty on fully built vehicles to the same rate as Semi-Knocked Down components made it difficult for local assemblers to compete with FBU importers/dealers.

Jaiyesimi said, “There is no way we can compete with fully built vehicles that are coming into the country. Before, the import duty on FBU truck was 25% and suddenly they it was dropped to 10%, the same rate for SKD components of truck.”

He also berated some policymakers in government of jumping out of the country to hold crucial meetings with vehicle manufacturers without discussing with Nigeria’s representatives of those foreign companies.

He said, “We should not be thinking about estacode (travel allowance) in most cases. We should look at how things can work in this country.

“What is the fate of the auto policy now? When this initiative started in 2014, some of us raised concern then that it is not enough for some people to just wake up and put up a position paper about the industry without consulting widely the industry players and stakeholders.”

The current NADDC Director-General, Mr Jelani Aliyu, says the bill auto policy is undergoing some review and he is optimistic that it will be signed into law before the end of the year.

Since 2019, Aliyu had said the Automotive Industry Development Bill passed by the eighth National Assembly was awaiting the President’s.

Aliyu in an interview with the Punch then gave the names of nine firms assembling vehicles in the country as Peugeot Automobile Nigeria, Nissan Motors, Honda Motors, Innoson Vehicle Manufacturing Company, Hyundai Motor Company, Ford Motor Company, GIC Motor Companies Ltd, JAC Motors and Kia Motors.

Nissan, Honda and Hyundai are operating under Stallion Autos which took over the old VON plant in Lagos.

President Muhammadu Buhari failed to give assent to the bill when it was sent to him at the beginning of this year due to some reported discrepancies and had to send it back to the National Assembly for a rework.

A few weeks ago, Aliyu said a revised national auto legislation that would fully guarantee investments in vehicle assembly plants, leading to a halt in importation of new and used automobiles would be enacted.

He told journalists in Sokoto that the NADDC was in talks with companies such as Toyota and Volkswagen to come and directly set up their production plants in Nigeria.

“The council is working to effectively implement an automotive policy agenda, with a view to bringing these companies back to Nigeria. They want to have a guarantee that regardless of whichever government is in power their investments will be protected,” Aliyu said.

But a former acting DG of the NADDC, Mr Luqman Mamudu, said there was nothing wrong with the auto policy, adding that adequate consultations and visits to countries for model examples were made with stakeholders when the policy document was being put together.

He however accused some self-serving auto operators of fielding the policymakers under the Muhammadu Buhari administration with lies about the policy, leading to the back-and-forth approach on the President’s assent for the  bill.

The Comptroller General of the Nigeria Customs Service, Col. Hameed Ali (retd.), represented at the CEOs Forum by Controller Musa Mba, said the agency only implemented the duty as directed by the finance ministry and the National Automotive Design and Development Council for industry with regard to vehicle imports.

He stressed the need for the genuine operators to be united and keep engaging the finance ministry on the duty issue.