The establishment of Peugeot in Kaduna, Volkswagen in Lagos, Leyland in Ibadan, Mercedes-Benz in Enugu, Steyr in Bauchi, and NTM in Kano, among others, by government in the 70s, marked the formal take-off of Nigeria’s auto industry.

However, an interplay of economic factors, including low purchasing power in the market and adverse effects of government policies like the structural adjustment programme (SAP) of the mid 80s, forced the companies to go under except, Peugeot Automobile Nigeria (PAN), Kaduna, which managed to continue producing at about 10 percent of installed capacity.

Peugeot 508.

The introduction of the National Auto Industry Development Plan (NAIDP) in 2013, encouraged some auto companies to set up new plants, with PAN reviving its Kaduna facility. Volkswagen Automobiles, Lagos; Innoson Vehicle Manufacturing Company Ltd (IVM) in Nnewi, and United Vehicle Assembly Limited (UVAL) plant built by Kia Motors, were the other prominent names that made headlines. PAN started the production of 301 and 508 – sedan and luxury sedan, respectively; while Innoson launched into the market a line-up of passenger cars, SUVs and sundry bus models. ANAMMCO, Enugu also bounced back when Transit Support Services (TSS) Ltd partnered with a leading Chinese auto maker to assemble Shacman heavy duty trucks and tractor heads.

However, recent happenings have raised fears that the industry may be heading back to its former moribund state if government does not immediately muster the political will to prevent this from happening. Already, companies that invested heavily in setting up auto plants are complaining of low patronage which has forced some of them to either down-size or operate skeletally, leading to loss of jobs.

Reacting, the Chairman, Automobile and Allied Sectoral Group of the Lagos Chamber of Commerce and Industries, LCCI, Dr. Oseme Oigiagbe, noted that though low patronage was a factor adversely affecting the local auto industry, the foreign exchange crunch is also a major issue.

According to him, the low price of crude oil in the international market has affected the disposable income of many Nigerians, just as he urged government to give priority to local auto companies that have invested hugely in the assembly plant projects, in the allocation of foreign exchange.

He called on government to encourage local auto assemblers through the 2016 budget by way of ensuring that they are given priority in patronage against importers of fully built up (FBU) vehicles.
Oseme noted that the “budget as it is today does not have policy measures to discourage importation of used cars”, which is a major step towards making a success of the revised auto policy.
Tariff on imported cars, he noted, “is supposed to be a dynamic issue, relative to local production and capacity utilization of local production.”

Frontline auto industry analyst, Dr. Oscar Odiboh, also bemoaned the sorry state of the auto industry.
“I know of a company that has sacked half of its work force, some others are busy converting staff from full time employment to contract staff, even when it is against the labour law to do so. When government says companies should not down size, how do you want them to pay their staff when you don’t buy vehicles from them?” he asked.
He, however, berated the auto companies for not talking enough about the challenges facing their sector, as according to him, “many people in this government don’t know the details of this new auto policy; stakeholders need to come together, I have been advocating for an Automobile Roundtable for all industry players to come together.”

The AGM Sales & Public Relations at the defunct Volkswagen of Nigeria Limited, Ojo, Lagos, Mr. Rasheed Adegbenro, reminded government that the success of a virile automobile sector rests on economy of scale, which can only be achieved through its patronage as the highest single spender, and the general market.


Adegbenro, who was until last year the acting Director General, Manufacturers Association of Nigeria, argued: “Government as the largest single spender in the economy could use her resources to provide a minimum level of demand that would assist the automobile plants at commencement of production”. 

Also commenting, Chairman of the Guild of Motoring Correspondents, GMC, a pressure group in the local auto sector, Mr. Frank Kintum, called on the Federal Government to increase the level of its patronage of vehicles made in the country. 

Reacting to the situation in the auto industry, the Director of Policy and Planning, the National Automotive Design and Development Council (NADDC), Mr. Luqman Mamudu, said the body is trying to drive up the value addition in the industry, even as he disclosed that the local content in commercial vehicles is more than that of passenger vehicles.

On the plans to encourage the patronage of locally made vehicles through a vehicle finance scheme in collaboration with a South African bank and the Central Bank of Nigeria, Mamudu disclosed that NADDC is expanding the scope.

According to him, NADDC did not get the level of incentive it expected from CBN, hence, it has decided to expand the scheme by going to the capital market, a move he noted is still at its preliminary stage.
The importance of the auto industry cannot be over-emphasised, as it is a major employer of labour, significant contributor to GDP, as well as a chief facilitator of technology transfer among others.

According to the International Organisation of Motor Vehicle Manufacturers (IOCA), the auto industry is the greatest engine of economic growth, just as the industry is a key sector of the economy of all major powers in the world.

This explains why countries like the USA, Japan, China and Germany, among others, cannot afford to neglect it. 

Contributed by Moses Akaigwe.

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