THE National Automotive Industry Development Plan, NAIDP, was introduced in October 2013 by the President Goodluck Jonathan administration to revive the ailing Nigerian auto industry. It was originally intended to encourage local manufacturing of vehicles and discourage importation of cars as well as gradually phase out used cars popularly known as Tokunbo. It was on account of this that the policy came with prohibitive tariff on imported fully built vehicles, while offering tariff rebate for SKDs meant for assemblage of vehicles in the country.
Essentially, the objective of the automotive policy is to restore assembly and develop local content, thus creating employment, acquiring technology and reducing pressure on the country’s balance of payment.
By the year 2014, about five of the country’s previously existing automobile assembly plants were upgraded and soon resumed operations, while seven dormant plants were resuscitated. Among the early starters were VON, PAN, Innoson, Anammco and Leyland-Busan. In a short while the number of these existing but now upgraded assembly plants had risen to 14.
Some new ones soon followed suit, bringing the total installed capacity to over 300,000 units per annum. In the forefront of the assemblage of vehicles were Nissan, IVM, Peugeot, Hyundai, Honda, Kia, VW, Ford, Changan, GAC, etc. Apart from cars and light commercial vehicles other vehicle types assembled included Ashok-Leyland buses, MAN, IVM, Sino, Shacman, MAN, FAW, Aston, Foton Forland and Isuzu Trucks and even Proforce armoured vehicles.
But the story changed later as complaints and criticisms began to emerge from different quarters about the policy and its mode of implementation. Indeed analysts and stakeholders in the industry are presently of the opinion that if nothing is done urgently to review the automobile policy, the country would continue to lose huge amount of revenue.
Maritime operators in particular were among the first to pick holes in the regulation. They, like some other stakeholders, have severally blamed the policy for causing a drastic reduction in the inflow of revenue to operators and the Federal Government through the Nigerian Ports Authority, NPA. Indeed, auto dealers estimated that Nigeria is losing over N800 billion to the policy, hence the call for urgent review in line with the current impact on the economy.
Impact on the economy
The situation was largely blamed on the inability of government to sustain attempts to build a robust automotive industry over the years, while leaving importation as one of the ways to meet local demands. Also blamed were rising inflation, lack of financing scheme, increase in tariff for both fully built (new) and Tokunbo vehicles and the disparity that weakened the naira against major currencies which made most of the plants unable to continue full operations.
FG’s involvement in auto industry
Federal Government’s involvement in the automotive industry began under the Second National Development Plan spanning 1970-1974. Prior to that time, what were in existence were sales outlets. In the Second National Development Plan, two passenger car assembly plants were established. The Plan received a major boost when the Third National Development Plan was initiated in 1975 extending to 1980. It was during this period that four commercial and truck plants began operation.
They were Volkswagen of Nigeria Limited, VWON, in Lagos; Peugeot Automobile Nigeria limited, PAN, Kaduna; Anambra Motor Manufacturing Company, ANNAMCO, Enugu; Styer Nigeria limited in Bauchi; National Truck Manufacturers, NMT, in Kano and Leyland Nisara Limited in Ibadan.But the companies were privatised in 2007.
But the trail blazers in establishing auto assembly plants included RT Briscoe, Leventis, UAC and SCOA. To them goes the credit of starting the development of the automotive sector in Nigeria in the 1960s from scratch, as it were, using CKD or SKD parts.
Before privatisation was introduced, the firms were said to have the capacity to produce 108,000 cars, 56,000 commercial vehicles, 10,000 tractors, 1,000,000 motorcycles and I,000,000 bicycles yearly. But the assembly plants could not survive the harsh economic environment orchestrated by many factors; so they collapsed.
Most of them were forced to pack shop when things began to go awry. Even the component builders, such as Dunlop and Michelin, also left after establishing rubber plantations across the country to source raw materials locally.