2013, do or die for Nigerian auto industry

on   /   in Motoring 12:04 am   /   Comments

By THEODORE OPARA

The year 2013 is the year everyone is looking forward to in the Nigerian automobile industry. Having survived the year 2012, most players in the nation’s auto industry wished that a year like 2012 should not come their way again. The year was characterised by untold hardship for automobile marketers which forced many of them to close shops.

According to the Managing Director of Toyota Nigeria Limited, Mr. C.K. Thampsy, “the year 2012 started on a turbulent note with fuel subsidy removal strike which slowed down business activities. He also pointed out that reduced spending by government due to its inability to fully implement the 2012 budget also took its tolls on the industry, while government and corporate purchases were  at lowest elb.

According to him, businesses continued to witness difficulties in accessing facilities from banks, while currency fluctuation during the early parts of the year furthers adversely affected the industry. Despite all these, Toyota Nigeria Limited exceeded its target for the year as its import volume from January-November, 2012 stood at 18,123 as against 14,237 during the same period in 2011.

*Talk of the moment, Hyundai Equus Luxury Sedan that led the Hyundai family to rake awards in Strategic Vision's Total Value recently

*Talk of the moment, Hyundai Equus Luxury Sedan that led the Hyundai family to rake awards in Strategic Vision’s Total Value recently

The nation’s vehicle import statistics from January to November 2012 revealed seven per cent drop in volume. While a total of 47,267 new vehicles were brought between January and November 2011, only 44,027 vehicles were imported during the same period last year. Apart from Toyota which made steady progress last year, and Tata Africa Services, other automobile marketers  said they recorded losses during the period.

The attendance at the last Abuja Motor show was a reflection of the state of the Nigerian automobile industry as most companies which used to grace the fair for awareness creation could not show up at the fair.

Mack Trust, represented by Lanre Shittu Motors pulled out at the last minute citing unfriendly business climate in the country. A very reliable source told Vanguard Motoring that the company was unable to dispose most of its trucks shortly after the fuel subsidy strike which caused havoc in the oil industry in Nigeria.

According to the source, the company had stocked hundreds of mack truck with the view that they would be in high demand at the beginning of 2012 but turbulent beginning in the year distabilised the company’s plans..  But despite the challenges, Lanre Shittu Motor still introduced the Sany range of construction equipment into the country. For the company, the years ahead would be better, hence, their heavy investment in the Nigerian auto industry.

For Hyra Motors, representatives of Geely, Brilliance and Jinbei Motors from China in Nigeria, their determination to succeed has kept them on. The company said they were owed closed to a billion naira by their corporate and individual customers. A source at Hyra Motor who would not like to be mentioned said that they ran into the problem while trying to device means of pushing their stocks and the plan boomeranged leaving them with very huge debt from their customers.

The Korean brands however seem to be finding their feet in the market, especially with the Hyundai and Kia brand. The Hyundai brand, no doubt, has become the cash-cow for the Stallion Group which apart from Hyundai, represents Honda, Porsche, Volkswagen, Audi and Skoda.

Though the company (Kia and Stallion) are still striving in the passenger car market, they also have discovered ways of cutting their cost. One of such strategies was huge reduction in advert campaign. Most of their adverts have been reduced to less than half page from full page in the past.

For the industry, it has  been the survival of the fittest, as many have reduced their staff strength to remain afloat, while at the same time curtailing their expenditures. Although most of them would not like the public to know that they have reduced their staff strength, Vanguard gathered that most automobile dealer may close shop or drop their franchises if the situation fails to improve within the first quarter of the year. In the luxury car category, however, Mercedes Benz, BMW, Range Rover, Porsche have continued to remain afloat despite the challenges.

Part of their challenges include the used car and grey import market from Europe and America. Unlike in the past when these brands used to launch as many models as possible, they have resorted to quietly introducing just few models while watching development in the industry.

Despite the tough time facing the sector, Coscharis Motors which represents BMW, Mini, Jaguar/Land Rover, Ford and other Chinese brands opened the largest auto showroom in sub-Saharan Africa for its brand. The gigantic edifice sited along Lekki Expressway, according to the president of Coscharis Group, Dr. Cosmas Maduka, is an investment for future.

The local auto assembly plants however, is nothing to write about. While Mercedes ANAMMCO, has gone under, PAN Nigeria, makers of Peugeot and another Chinese brand is yet  to find its feet. For Volkswagen of Nigeria whose plant now produces Ashok Leyland, its survival lies on government patronage while Innoson Motors, the Enugu based automobile assembly plant is striving to prove doubting Thomas wrong that a private auto plant can survive, no matter the operating atmosphere. But how far it can goes under the current tariff regime remains unknown to industry players and observers.

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