Due to the harsh effect of the recession recently experienced in the Nigerian economy and the resultant drop in the purchasing power of Nigerians and Nigerian businesses, the automobile Industry in Nigeria is currently witnessing a drastic drop in the demand to acquire and own brand-new vehicles.
Being an import based commodity which also attracts 70% Customs Duty, sustaining the automobile Industry on the existing structure of Completely Built Unit (CBU) was no longer viable.
There has been an astronomical increase in the price of brand-new vehicles as well as the cost of servicing and maintenance.
This trend began early 2016 and by the end of the same year, the automobile Industry experienced an unprecedented increase in the price of its commodities and services rendered (nearly up to 200%).
This development rattled industry watchers, practitioners and stakeholders alike as everyone was taken unawares.
It was inevitable to see the market slide into a decline as rising forex and a weak Naira forced consumers of the various automobile brands made up of mainly corporate organization and private individuals to retreat and seek cheaper alternatives.
Most recently Asian brands which were hitherto not the preferred option became desirable inorder to fill up gaps created by the high cost of the established brands.
As 2017 winds up, the Chinese brand of vehicles have experienced increased sales and patronage as most Nigerians are beginning to look towards that direction to fulfill their automobile needs.
As I write this, there seems not to be a quick solution towards returning back to status quo as prices of vehicles continue to rise.
This trend will continue unless Government encourages and supports automobile companies to manufacture locally or at the very least assemble locally either through Semi Knocked Down (SKD) or Completely Knocked Down (CKD) as a quick fix towards making prices of vehicles affordable for her citizens.
This can only be possible when Government invests in infrastructure like steady power supply, establishing clusters for local production of spare parts,low tariffs and waivers for imports of assembly kits.
If well implemented this will force down prices of vehicles and may well put the Nigerian economy back on the road to industrialization.
Trust Nigerians, we are already making light of this injurious condition by shifting our focus to fairly used cars popularly called “Tokunboh” and registered vehicles also referred as “Nigerian Used”.
Before now the used car market was patronised by mainly low and average income earners who see them as their only hope of acquiring and owning vehicles, largely because of their relative affordability and accessibility.
I hereby solicit for Government intervention through creating and implementing policies that will encourage investors to channel resources towards revamping the almost comatose automobile sector.
In the past, investments have been lost due to stringent policies in the form of heavy taxations, which unfortunately led to lack of investors’ confidence due to general uncertainty surrounding their Return On Investment. This is mostly orchestrated by sudden change in administration, unfriendly government legislation and policy somersault.
According to Dwight .D. Eisenhower the 34th President of the United States of America, “plans are nothing but planning is everything”.
To this end, there is every need to chart a new course for the automobile Industry in Nigeria, because…….a country that fails to plan definitely plans to fail.
Written by Louis Alozie.
Louis Alozie is an automobile consultant and sales expert.
He currently holds the post of Marketing Manager with the Volkswagen Centre, Lagos.
He is also the Managing Partner; Automobile Consult & Services