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27 auto makers interested in assembling in Nigeria

By BusinessNews Staff on April 19, 2015

More auto makers at the global level have indicated interest in assembling their vehicles in Nigeria, the Federal Government has said.
The response from these internationally renowned auto makers is fallout of the National Automotive Policy, said the Minister of Industry, Trade and Investment, Mr. Olusegun Aganga.
The minister stated this, recently, after he inspected an auto assembly plant established at Isolo, Lagos by UVA Limited, a subsidiary of DANA GROUP. The plant, where Kia and Renault vehicles are assembled is designed to produce 25,000 vehicles per annum when all the lines have been completed and are in operation.
Aganga stated that as at the last count, 27 auto makers had indicated interest in assembling vehicles in the country and that the government never expected the level of interest.
“Nobody would expect a Nissan to assemble cars here that soon or that a Toyota will be working on a plan or a Ford or a KIA. Yes, we are extremely excited that we are moving in the right direction,” he said.
Aganga said he was pleasantly surprised by the UVA plant, saying that he did not expect that they had gone this far. “I knew they were working on it, but I didn’t know they had gone this far; that they have started assembling already and that they are assembling 24 cars a day of different makes and these are good quality cars.”
He also praised the type of equipment they have at the plant, which he believes shows that they had the right technical partners.
Aganga said what he saw during his travels abroad hardly matched the sophistication of the equipment at the Isolo plant and that the efficiency was remarkably different from what he had seen outside the country. “I have been to other plants in Nigeria as well as in South Africa.”
The minister also lauded the owners of the plant, saying that the government would support them. “Look at the number of young Nigerians that have been employed; all of them Engineers from different universities that may not have the experience if this was not here. You can see how important this is to the economy.”
This is just a beginning, he said, adding that a lot would be achieved in the next 20 to 30 years.
“For a country as big and as young as Nigeria, the market is big because everybody wants to ride a car and more people will buy a car if they can afford it.”
The minister explained that the various auto assembling companies in the country were operating at different levels with some putting together semi knocked down (SKD) components, known technically as SKD I and SKD II while others are at the completely knock down (CKD) level.
He said at the CKD level are companies such as Peugeot in Kaduna and Innoson in Nnewi, Anambra State, saying that the local content put in by Innoson is approaching 45 per cent. The company has been able to achieve this because it has a plastic industry, adding that he makes everything in a car that is made of plastic. “He employs 4,500 people in the plastic industry, for example.”
As for Peugeot, he said they had been in business for a while now. “They have the biggest and a more sophisticated plant.
They employed more than 4,000 people. They got their parts from Lagos by rail and the rail is still there in Kakuri.”
He recalled the excitement of former Head of State, General Yakubu Gowon, who after visiting the plant recently, prayed for the success of the auto policy, and that he urged the government to do all that was necessary to sustain it because of the benefits the auto industry has for the country.

Purchase Financing…
On the government’s plans to make it easy for people to purchase vehicles assembled in Nigeria, the minister said he said Nigerians spend about N6 billion importing vehicles and spare parts annually and that this expenditure profile was unsustainable.
He said it was good that the government started the policy now and explained that with the downturn in the oil industry, there would not have been foreign exchange to fund such massive importation.

Ban on used vehicles…
The government, he said is responsive to the desires of the people hence it did not ban the importation of used vehicles as is done in other countries with similar auto policies.
He said it would be counter-productive to place a ban on used vehicles when the number of vehicles assembled in the country was not enough or when those assembled here are not affordable to majority of Nigerians.
“You cannot spend money assembling cars when the demand is not there. That is why we are working with the industry for them to prioritise the assembling of affordable vehicles.”
He said the assembly plants currently in operation in the country have do so and have promised to provide affordable vehicles. “UVA, Nissan, Peugeot, and Innoson have prioritised it.”
He said another thing the government was doing was to put a financing scheme in place so that Nigerian could purchase these cars, saying nobody would love to buy used cars if there are new cars. “The problem is that people have to pay cash up-front. So, what government is doing is working with financial institutions to have a car purchase scheme so that anyone who is able to buy a car will have financial support.”
He said in addition to this, some of the auto assemblers either have their vehicle purchase finance scheme or are planning to have one. “PAN launched their own not long ago and think Nissan has a scheme, but government is working on a bigger scheme.”
The policy, he said was not designed to target any manufacturer but that it was conceived to benefit the nation’s economy and the people, adding that the government consulted widely.
He said people were free to bring in luxury cars like the Jaguar, Mercedes, among others, adding that “if you are rich enough to buy these cars then you should be able to pay the duties.”
He said it took the government more than a year to do the policy, adding that they thought through everything and consulted internationally. “When you are starting something that others have done, you have an advantage because you don’t have to reinvent the wheel. Ask questions and you will come up with a better product than theirs.”

[ThisDay]

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