…Says FOREX Remains a Challenge, Despite CBN Interventions
Toyota Nigeria Limited (TNL) has made a downward review of Nigeria’s auto market performance outlook for the current year, predicting it would not record more than 10,000 units sales at the end of the year, as against 16,000 units it predicted in November 2016.
The company’s Managing Director, Mr. Kunle Ade-Ojo, threw the bombshell, while addressing Motoring Journalists during TNL’s quarterly press forum held at the company’s Lekki-Lagos head office on Thursday, 11th May.
Mr. Ade-Ojo attributed the downward forecast, partly, to the sector’s performance record in the first quarter of the year.
“Based on the Q1 performance,” he stated, “we forecast that the auto industry will do, on worst case scenario, 8000 and best case scenario 10000 units this year, which is very abysmal. But that is the reality on ground.”
Reviewing the sector’s performance in the first quarter of 2017, TNL boss, revealed that total vehicle import figure by the auto sector dropped by as much as 90%, in comparison with the same period last year.
“At the end of Q1 of this year,” he recalled, “total import figures, as found out from the port, came to just about 350 units, compared with about 3500 units that came in last year. So the imports have dropped by about 90% between Q1 2016 and Q1 2017.”
According to him, the sharp drop was due to inability of auto importers to assess Forex, despite claims of dollar abundance by the Central Bank of Nigeria (CBN) as well as high duties on imported Fully Built Up (FBU) vehicles.
In terms of retail sales during the period, Ade-Ojo reckons the entire auto market recorded a drop of over 50% compare to the same period in 2016.
“Based on the local information we have,” he said, “the total market did about 2000 vehicles compared to about 5500 that was done in Q1 period of 2016.
But, according to TNL boss, out of the total figure, Toyota Nigeria had a share of about 23%, which in figure terms, translates to about 460 vehicles, most of which, he said were commercial vehicles.
Despite media reports of flood of dollars injected into the market by the CBN, Ade-Ojo lamented that throughout the first quarter, FOREX remained a challenge to the auto sector, claiming the currency was not readily available to importers.
He said: “Contrary to what you read in the papers that CBN have stated that money is being released but that only a percentage of it is being taken by banks, we are having a different scenario, because the banks are telling us that they are not getting this money from the CBN.
“And as a result, banks are not even able to provide the funds for us to bring in goods. And if you are to even try and get or utilize whatever facilities you have with the banks, the banks would expect you to look for the cash, because they don’t have the Naira to lend us.
“So we have to borrow the Naira from bank A to fund the dollar being borrowed from Bank B or give it to the bank that is going to give us the fund. So we are double borrowing. We are borrowing in dollar and still have to back it up with Naira. And they will tell you they are not going to give you the dollars unless you have the Naira.
“So we have to go and borrow the Naira to supplement the dollar. So even though there has been an appreciation in the Naira against the dollar, other significant costs are impacting the value of goods. That is why a lot of distributors have not been able to adjust their prices ”
Despite the glooming outlook of the months ahead, Mr. Ade Ojo assured that his company has remained on top of the situation, adopting risk management approach.
“Like I mentioned in a recent interview,” Ade-Ojo stated, “we adopted risk management strategy, which is a combination of finance management, cost management and prioritization of the vehicles we bring in.
“Because of limited fund, we cannot afford to market all products, but focus only on the fast moving ones. In addition to that, we focus on after-sales service, because we realized the importance of maintaining our loyal customers, for it is easy to keep old customers than it is to gain new ones.”
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