The National Automotive Council (NAC) has said smuggled vehicles will soon become unattractive because their buyers will not be able to obtain number plates from Federal Road Safety Commission (FRSC) and vehicle licences from state vehicles registration offices.
NAC was reacting to reports on the looming crisis in the Auto sector, following worries by Freight Forwarders Association of Nigeria that the new National Automotive Industry Development would stem the inflow of used vehicles into Nigeria and deny them their main source of income when the workers are laid off.
It listed the factors that would stem the inflow to include 150 per cent hike in tariff on used vehicles, smuggling and possible diversion of second-hand vehicles to neighbouring ports.
Freight Forwarders Association also worried that Nigerians cannot afford new cars if produced locally, that tariff hike will and has already led to price hikes for existing stock of vehicles in Nigeria even before the policy takes effect and doubted the capacity of existing local automotive plants to meet demand.
It advised that the Original Equipment Manufacturing OEM should invest in Nigeria first before requesting protection. Claiming to base this advice on the stance of former President of Nigeria, Olusegun Obasanjo’s regime.
A statement by Mr. Luqman Mamudu, NAC’s Director Policy and Planning, said the policy has an in-built program to pursue this course.
He said, “Smuggled vehicles will sooner or later become unattractive because those who buy them will certainly no longer be able to obtain plate numbers from Federal Road Safety Corps (FRSC) nor Vehicle License from various state vehicle registration offices. The policy has an in-built program to pursue this course.
“The policy program for vehicles assembly makes it extremely easy for new and existing entrants to set up shop. The objective is to quickly ramp up national output of new and affordable vehicles to meet demand in less than two years and significant employment will happen for all levels of Nigerians. With time, Nigeria will commence export by RORO. RORO is two ways; import and export. At the moment, our association simply rolls off. With sustained implementation of the policy, they will soon roll on because Nigeria will export vehicles eventually.”
Also, the National Automotive Industry Development Plan (NAIDP) was well thought out with all the concerns raised in full focus. Investment in the automotive industry is capital intensive and most OEMs go to countries where investment environment is right and a country whose borders are as wide open (lowest tariff compared to economies with automotive agenda) to influx of Used heavily undervalued vehicles definitely is not one of its desired destinations.
“If, as agreed by the group that NAIDP is desirable, something needed to be done in this respect. The tariff by the way is not 150 per cent. All used vehicles will be imported but valued as new ones and depreciated by 10 per cent annually for cars and 20 per cent annually for commercial vehicles. It is the residual value that is subject to 35 per cent duty and 35 per cent levy. Both new and used vehicles will continue to flow into Nigeria in form of SKD/CKD and who else will clear them if not members of the association? What has simply changed is the type of cargo. The local manufacturers will still import FBUs twice the number of SKD/CKD and all will be cleared by the association members.
“The policy is simply designed to ensure that a larger proportion of automotive vehicle import is in the form of Semi Knocked Down (SKD) and Completely Knocked Down (CKD) form and duties are crashed to average of seven per cent for SKD and zero per cent for CKD to encourage this. The whole idea is to create jobs for Nigerians. New Fully Built Units (FBUs) at concessionary import duty rates by assemblers to bridge possible gaps in supply will continue in order to control possible price rise.”
He added that on the issue of affordability, the policy makes provision for a Credit Purchase Scheme to be funded from sources including existing NAC fund, and levies charged on imports in order to offer Nigerians opportunity to buy new cars on credit at single digit interest rate for upward of forty eight months.