By Theodore Opara

With the down turn of the economy, the auto sector is undoubtedly one of the worst hit, as low patronage has forced many companies in the sector, especially those who have invested heavily in the setting up of auto assembly plants, to sack staff and scale down some of their operations, reports XYZ Nigeria is not new in the business of auto assembling, as government’s interest in this area can be traced back to the 70s when the Federal Government collaborated with some auto companies abroad to establish assembly plants.

Peugeot in Kaduna, Volkswagen in Lagos, Leyland in Ibadan, Mercedes-Benz in Enugu,  among others, were some of the companies that set up plants in the country for passenger and commercial vehicles production. However, the poor economy,  low purchasing power of the people and government policies forced almost all these companies to go under except Peugeot Automobile Nigeria, Kaduna, which was producing at about 10% of installed capacity.

Nonetheless, with the introduction of the National Auto Industry Development Plan (NAIDP) by the Jonathan administration in 2013, some auto companies were forced to set up plants, with PAN Kaduna re-inventing in its plant. VON, Lagos and Innoson in Nnewi were the other two prominent names that made headlines. PAN started the production of 301 and 508 sedan and luxury sedan respectively, while Innoson produces IVM 6490, an SUV and IVM 500 bus among others.

However, recent happenings have raised fears that the industry may be heading back to its former moribund state if government does not immediately invoke its political will to prevent this from happening. Observers say the new policy has dragged for too long and major components to make the policy succeed are yet to be addressed. Already, companies that invested heavily in setting up auto plants are complaining of low patronage, forcing some of them to down size and close shop, leading to lose of jobs.

In his reaction, Chairman, Automobile and Allied Sectoral Group of the Lagos Chamber of Commerce and Industries, LCCI, Dr. Oseme Oigiagbe, noted that though low patronage was a factor adversely affecting the local auto industry, the foreign exchange crunch is also a major issue. According to him, the low price of crude oil in the international market has negatively affected the disposable income of many Nigerians, just as he called on government to give priority to local auto companies that have invested into the setting up of assembly plants in the allocation of forex.

He called on government to encourage local auto assemblers through the 2016 budget by way of ensuring that they are given priority in patronage against importers of Fully Built Up FBU vehicles. Oseme noted that the “budget as it is today does not have policy measures to discourage importation of used cars”, which is a major step towards making a success of the revised auto policy. Tariff on imported cars, he noted, “is supposed to be a dynamic issue, relative to local production and capacity utilization of local production.”

Frontline auto industry analyst, Dr. Oscar Odiboh,  bemoaned the sorry state of the auto industry, even as he noted that Innoson Motors is only one of the many auto companies that are down-sizing staff. He said: “The reality on ground is affecting everybody. Innoson should be commended for letting us know. There are many other auto companies that are down-sizing and not saying anything about it. “I know of a company that has sacked half of its work force, some others are busy converting staff from full time employment to contract staff, even when it is against the labour law to do so. When government says companies should not down size, how do you want them to pay their staff when you don’t buy vehicles from them?” he asked.

He, however, condemned the auto companies for not talking enough about the challenges facing their sector, as according to him, “many people in this government don’t know the details of this new auto policy; stakeholders need to come together, I have been advocating for an Automobile Roundtable for all industry players to come together.” Also speaking, Chairman of the Guild of Motoring Correspondents, GMC, a pressure group in the local auto sector, Mr. Frank Kintum reasoned that the auto industry plays very important roles in the economy of any country.

According to him, the Federal Government should at all times pay premium attention on issues affecting the industry as “a healthy auto industry serves a as catalyst for the growth of all other sectors, aside its contribution to the GDP.” Kintum said: “Don’t forget that in Nigeria, we rely heavily on road transportation for both passenger and cargo movements. Hence, it is only reasonably that the government takes more seriously the implementation of the auto policy so that the country benefits in terms of value added while making use of this means of transportation.”

He added that there is a need for government to practise what it preaches, saying “charity, they say begins at home. Government should increase its level of patronage for locally assembled vehicles. Government’s continued patronage will go a long way in reassuring those who have taken the bull by the horn by setting up assembly plants.”

Mr. Luqman Mamudu is the Director of Policy and Planning of the National Automotive Design and Development Council (NADDC), the Federal Government agency responsible for the promotion of the local auto industry.  In a chat with him, he said that NADDC is trying to drive up the volume of value added for locally assembled vehicles, even as he added that the value added for commercial vehicles is more than that of passenger vehicles.

On the plans by NADDC to encourage the patronage of locally assembled vehicles through a vehicle finance scheme in collaboration with a South African bank and the Central Bank of Nigeria, Mamudu revealed that his agency is expanding the scope.

According to him, NADDC did not get the level of incentive it expected from CBN, hence, it has decided to expand the scheme by going to the capital market, a move he noted is still at its preliminary stage. Industry players may have divergent views about the development of the industry, but one area in which there is no ambiguity is the fact that government is still at the epicentre of how the industry can move forward by way of policy formulation, patronage and the show of sustained political will.