…’Motorcycle price was crashed from N150, 000 to N60, 000, trying to do same with cars’
…Explains why auto assembly plants in Nigeria collapsed
By Nnamdi Ojiego
Chief Innocent Chukwuma is the Chairman/Chief Executive Officer of Innoson Vehicles Manufacturing, IVM, a foremost automobile maker in Nigeria.
In this exclusive interview after a facility tour of his Nnewi automobile factory, Chukwuma reveals the secrets behind his success in the automobile industry, why he has never failed in any business ventures, his major challenges, his new factory in Imo State and planned partnership with a foreign company. Excerpts:
Some Nigerians still think that Innoson is just an assembling plant and not a car production company. What is your status?
You are here now and you have seen things yourself. Let me use this opportunity to say this once again; Innoson does not assemble vehicles, we manufacture. We build 100 percent vehicle body here and over 60 percent of the products used in manufacturing the vehicle are gotten from Nigeria.
We make all the carcass of all our vehicles here. We only import some engines and electrical components but produce all the plastic parts here. We have produced many new vehicles according to the demands of our customers and what they need those vehicles for. Even if they need what we do not have, we make the mould and produce their request and to specifications. That is why we are a vehicle manufacturing company, not assembling company.
Despite the challenging terrain of the automobile industry in Nigeria, you have succeeded in making a name for yourself. What’s your driving force?
Yes, I started this business from the scratch. So, it may not be out of place to say that I have made a name for myself. However, I still believe that I haven’t reached where I want to be. It might interest you to know that I never fail in any business I have ventured into.
This is because when you go into any business, you have to put your own ideas in it and when you do, the difference will be clear and you can make more money than others. You can also drop the business when you think there isn’t much interest in it again. So, to succeed in any business, don’t follow the crowd, always bring your own initiatives. With that, you will be able to make profits.
That has been my driving force, always looking for new ideas that are different from what everybody knows. For example, when you are into a particular business and it is no longer as lucrative and profitable as it used to because many people have ventured into it, you can leave the business for those people who lack ideas and go into a new business. This is because, as they are coming into the business, the profit margin will continue to diminish. So you leave it for them and find another fresh business idea to develop.
By the time they understand or realise how profitable the new idea is, you have already made your money and leave it for them. However, if the business is still convenient for you and gives you what you want, you can continue.
But if you feel that what you are getting there is not enough, leave it for those people who came to spoil it and develop a new one. That is the system I operate. I started trading in motorcycle parts with my brother. I started by buying from companies like Leventis that were importing the parts then. From there, I started importing myself. Later, I developed a complete motorcycle and not just the parts. I was the first person to develop complete motorcycle in Nigeria.
Because of my experience in the spare parts business, I found out that to bring motorcycle parts and couple them here in Nigeria was cheaper than bringing them as a complete motorcycle. So I decided to give it a try and it worked. I brought my own in parts and hired local mechanics to assemble and couple them. With this, my own cost was 40 percent cheaper. So, while others were selling at N150, 000, I was selling at N80, 000. Then, the cost of second hand motorcycle was N90, 000. People who used to buy second hand motorcycle decided to be buying my own since it was brand new and cheaper.
That’s how I benched my competitors who were selling at N150, 000. So, they had no choice than to adopt my strategy in importing their motorcycles. When they started copying my method, I veered into local production of plastic components of motorcycle parts so that I could be bringing only the iron components from abroad.
This also helped in bringing the price of my motorcycle down to N60, 000 which has been my aim from the onset. My competitors also discovered that it was better for them to buy plastic components from my company than bringing it from abroad. So, they started buying plastic components from me. With that, I left the motorcycle business for them.
Venturing into vehicle manufacturing
After some time, I decided to do what I did in motorcycle in vehicle. So, that’s what I’m doing today. I ventured into vehicle manufacturing immediately I became weak on motorcycle. I changed my focus to vehicle. I studied about vehicle production for about seven years before I could start. When I was building this factory, all my good friends and everybody I knew were asking me why did I venture into the business?
They said all the people who ventured into it in Nigeria failed. I told them to check all the businesses I have done, that none has failed. Before I entered into vehicle manufacturing, I have seen why others failed. And I told them that I would remove that which made others to fail and I did. That’s why I started by manufacturing and not by assembling. The people who failed started by assembling vehicles in Nigeria. And in that case, if anything happened to the parent company, the assembling plant here would lose because foreigners are not interested in building anything here.
They are coming to Africa to make profit and not lose, they want to make as much profits as possible and go. They are not interested to build us.
So, to avoid the pitfalls of others, I went and studied where we had problems and I paid for professionals, expatriates who came here and trained my people. I brought them to Nigeria, about 60 of them, in the first year we started this factory. Some of them finished under one year and left by the second year, I had about 42 and in the third year, I had about 15. Today, I have only eight.
Most vehicle manufacturers are switching from petrol to electric engine. Are you thinking in that direction?
I never built engine for the first time. I only build body and buy engine. What we do here is building complete motor body. Therefore, if electric is better, what I will do is to partner with electric company to supply me electric engine. And in that case, I won’t lose anything. If electric vehicles become the new normal, we’ll switch over to electric
Where do you export to? Do you supply your vehicles to other African countries?
Yes. As of now, I have order of about $4.7million worth of vehicles from Sierra Leone. That’s what I’m producing now for Sierra Leone government. Normally, I do get order and supply from within and outside the country.
What kind of support have you received from the Buhari government?
The Federal Government is doing everything possible to support the manufacturing sector with good policies, but the problem lies in the implementation. They have done enough in terms of policies to support local content but, like I said, implementation is the problem. So, I won’t say that government is not helping. They are doing their best. If you look at the policies, they are favourable.
How’s government, especially the legislature and the executive, patronizing your company based on the ‘buy Nigeria, grow Naira’ mantra?
Didn’t you see what happened at the National Assembly recently? They decided to buy Toyota cars made in Japan, that they are too big to drive made in Nigeria cars. Didn’t you hear it in the news?
…I heard it. I also heard that it was the member representing you that objected to buying your vehicle…
I don’t know about that. Whatever the person representing me said doesn’t matter to me. All I know is that was the decision of the National Assembly. Anything all of them agreed is what they will do. You can’t tag it to somebody representing me because he’s just one person and he can’t decide for the entire lawmakers. So, if the NASS decides anything, he can’t stop them.
What would you say has been your major challenge in this business?
Well, in manufacturing, there are a lot of challenges. But when you know that such challenges would come, you make provisions for them because, if you don’t have space to accommodate any challenge, one or two problems will force you to close shop. Any manufacturer will tell you about energy or electricity situation in the country.
When we were starting the factory, we knew we had such problem. So, we planned it in such a way that power situation will not affect us. There was a time we didn’t use electricity from the national grid for four years. I ran generator for that four years.
The issue was that the electricity company was over-charging me. They were giving me more bills than what I was supposed to pay because it was based on estimated billing. They failed to realise that we have engineers here who can calculate what we use. We asked them to install prepaid meter for us but they refused. So when they wanted to act smart, we wrote them officially to disconnect us.
We bought four different sizes of generating sets for the factory according to what we were doing then. We were running the generators eight hours each everyday for four years until the electricity company agreed to install a prepaid meter for us because they found out that they were losing. So they brought prepaid meter for us and we paid. So, electricity has been our major challenge but we made provisions from the outset to accommodate it.
Another major challenge is scarce foreign exchange. It has become increasingly difficult to access foreign exchange to import some of the components we use. How can you be telling the President that you need foreign exchange? I know from his speeches, he wants manufacturers to get but some of us don’t get. We find it difficult to access foreign exchange, we don’t get at all. How can you be doing black market to do manufacturing? It is difficult. That’s why we are focusing more on export now to get foreign exchange to enable us to continue to run the factory.
What about the South-East governors, do they patronise you as one of their own?
Well, I will say that they are doing their best and even the Federal Government is doing its best in patronizing us. However, if all the South-East governors are like that of Imo, then, we don’t have problems. The present governor is number one in implementing the local content. He deserves an award for that. Go to Imo, all the vehicles they are using are made in Nigeria. So Imo has got somebody in the governor who knows what’s good to do and we appreciate him for that.
Have you considered partnering or merging with known foreign vehicle manufacturers?
Well, most of them want me to partner or merge with them. Yes, we are looking into it. I’m going to open a new factory in Imo in partnership with foreign companies. I believe the partnership will help us to develop motor manufacturing on a bigger scale in Nigeria.
Is Imo government supporting you in that project?
Yes, Imo State government has indicated interest and they are supporting us. So, with my foreign partners, we will work together and develop it there.
Talking about siting of factory, what informed your choice of siting your factories in the South-East instead of the commercial city of Lagos?
Commercial city of Lagos is too busy. I want where there will be space for manufacturing. I’m also looking at the proximity with my other companies because, the way our companies were set up, factory A can produce something for factory B and vice versa. Another reason is for easy communications and management. I’m not interested in any particular region, be it South-East, South-West or North. It doesn’t matter to me. After all, I’m from Anambra but I have only one factory in Anambra, I have one in Enugu and will soon have one in Imo and Edo. Gradually, we’ll reach there.
Do you have any interest to contest for political posts such as President, governor?
Let me make it clear here that I am not a politician and I’m not interested in politics. I am a manufacturer. I will be an industrialist until I become weak. When I grow old I go home and retire. I don’t have time for politics. There are people who are politicians, let them continue with their politics. And as for the 2023 presidential election, I’m not interested in who is coming out. When the time comes, I’ll make a choice among those contesting. And I don’t know who I will vote for; it depends on who comes out.
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