The Director-General of the National Automotive Council, Engr. Aminu Jalal has disclosed that the council has been receiving inquiries from leading automobile manufacturing companies from across the globe since the announcement of the new auto policy by the Federal Government with the aim of setting up plants in Nigeria. He identified some of the auto companies as Nissan, Toyota, Volkswagen, Honda, Kia, Tata, etc.
Attracting investments into the sector
The Director-General in a paper titled “measures to transform the Nigerian automotive industry and attract investments into the sector, said that in many countries of the world, the automotive industry plays both a strategic and catalytic role in economic development in respect of employment creation, GDP contribution, economic linkages, skill development, technology and innovation as well as SME development in respect of automotive parts, components and services.
According to him, “an automotive industry will create significant good quality employment and wide range of technologically advanced manufacturing opportunities. This industrial base can then form the foundation of other modern advanced manufacturing activities such as commercial vehicle production which will lead to the manufacturing of agricultural, mining and railway equipment, military hardware and transport.
The Director-General noted that data from the Nigerian Automotive Manufacturers Association (NAMA), the Nigerian Bureau of Statistics (NBS) and United Nations Conference on Trade and Development show that a total of 400,000 vehicles (300,000 used and 100,000 new) valued at N550 billion (US$3.451 billion ) were imported in 2012 alone.
He argued that at full capacity, the Nigerian Automotive industry has the potential to create 70,000 skilled and semi-skilled jobs along with 210,000 indirect jobs in SMEs that will supply the assembly plants. 490,000 other jobs would also be created in the raw material supply industries, adding that currently about 2,584 persons are directly employed by the assembly plants.
The NAC boss further stated that manufacture of vehicles would enable the country to acquire the technologies of mass production, quality control, lean manufacturing, computer aided design, manufacturing and engineering which can develop other sectors of the economy and industrialization. On the prospect of the automotive industry in Nigeria, he explained that Nigeria and Bangladesh were the only countries in the top 10 by population without a developed automotive industry, adding that “with our current population and economy, our potential vehicle market is about a million vehicles annually which is more than sufficient to support an automotive industry.
Meanwhile, he said, Nissan, Renault and Toyota have indicated keen interest to invest in Nigeria, if we develop a comprehensive automotive development plan.
According to him, Nissan and Renault have already reached agreement to assemble cars in the former Volkswagen plant, now VON Nigeria Limited, in Lagos. Toyota and others are now conducting feasibility study on vehicle assembly in Nigeria, assuming that a comprehensive automotive development plan would be in place.
Also speaking on the Nigerian tyre industry, Engr. Jalal, blamed radical government policies for their death through drastic reduction of tariff on imported truck tyres from 40 per cent to 10 per cent while keeping tariffs on car tyres the same which made local producer uncompetitive against imports from Asia and Europe.
He pointed out that although car tyre tariffs were kept at 40 per cent (20 duty and 20 levy) the disparity in car and tyre tariffs has led to a situation were imported car tyres were declared as truck and bus tyres so as to pay 10 per cent duty instead of 40 per cent as stipulated. This, he said led to the closure of the two tyre manufacturing companies (Dunlop and Michelin) in Nigeria.
To this end he disclosed that the development plan has introduced measures to revive the tyre industry. He also pointed out that the revival of the plants will create over 3,000 direct jobs and save Nigeria N120 billion annually which is currently being used to import tyres into the country.
Response by auto makers to new auto policy
According to the Nigerian Automotive Council (NAC), there has been massive response to the new auto policy.
A week after the approval of the policy, NISSAN announced that it will assemble vehicles at VON Nigeria ltd., with the first vehicle to roll-out in April 2014.
The Embassies of EU, Japan and South Korea were briefed on the policy at their request so that they can inform their companies of the opportunity offered by the policy.
Toyota and VW are conducting a feasibility study on assembling vehicles in Nigeria and Peugeot is considering resuming operations. Honda, Kia, Tata and others in Brazil and China made enquiries about assembling vehicles in Nigeria, Michelin Tyres and DN Tyres Plc have received briefing and are both in consultation to resume manufacturing activities in Nigeria;
GAC Gonow Auto Company of China and Xiamen Golden Dragon Bus Co. Ltd of China have both signed Completely Knocked Down (CKD) agreement with Innoson Vehicle Manufacturing Company( IVM) Limited to increase capacity for the production of Buses; SUVs models and set up a training center in Nigeria;
CJSC Kamaz Foreign Trade Company of Russia has consulted with the Ministry with a view to building its wide range of trucks including its popular all terrain commercial and military vehicles; The OEM dealer for KIA automotive products DANA Group, has discussed extensively with a view to investing In a Kia Semi Knocked Down (SKD) plant in Nigeria;
The Japan External Trade Organisation has led a group of Japan companies including Messrs Marubeni, Mitsubishi and NISHIZAWA (Nig.) Limited to obtain clarification on policy. Investment proposals are expected; Fullmark Urja Ltd has submitted application to the Ministry to commence the manufacturing of Tricycle with 70% local content by April 2014 in Kano. Installation of all necessary equipment has been confirmed;
COPE and CIA LTDA of Brazil, the world second largest manufacturers of Machines for General purpose including for Rubber, Plastic and Tyre rethreads consulted with the Ministry with a view to setting up in Nigeria as a preferred base for global supply; Discussions were held with CAIO-INDUSCAR of Brazil on the assembly of its products in Nigeria. They have been introduced to Leyland-Busan of Ibadan as potential Nigerian partners.
A company assembling trucks at the Calabar Free Trade Zone, CC Auto Fze, plans to start assembling cars.
Tetralog Nigerian limited, Enugu (Mercedes Benz truck dealers) has commenced civil work for a world class automotive factory to assemble CKD for Mercedes Trucks. A vehicle distributor, Lanre Shittu Motors informed the NAC of their plan to assemble vehicles.
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