Major impediments working against the success of the Nigerian automotive industry include vehicle dealers, who fraudulently import brand new, fully built-up vehicles, but pay duties on them as second-hand vehicles, Mr. Remi Olaofe, Executive Director Nigerian Automotive Manufacturers Association (NAMA), has revealed.
According to him, the culprits have formed a powerful cartel, which, for selfish interest, would do anything possible to ensure that Nigeria’s auto policy does not succeed.
Responding to an interview with Nigerian Auto Journal’s editorial team recently, Olaofe alleged that the culprits belong to the category of people, who do not like the nation’s auto policy because it is more profitable for them to import fully built-up vehicles for sale.
“For every decision taken,” he pointed out, “there will always be pro and those against it. It favours some and it does not favour others. Some people don’t like it. I will say to you point-blank that it is easier to trade than to manufacture. When you bring in your vehicle fully built, all you need is your showroom. You know the cost from the beginning in terms of clearing, duty, keeping it and the profit margin.
“You can’t do that in manufacturing because there, you have many things to contend with. For example, the personnel issue, raw materials, capital outlay, infrastructure and others. All these will go into assembling a vehicle. But a vehicle that has already been assembled that you are just bringing in is different.”
Olaofe revealed that what the culprits do is to buy brand new fully built-up vehicles abroad, drive each to record about 100 miles and afterward ship them to Nigeria as used vehicles.
He explained: “For instance, what they do in the US is that when they buy a new car, they drive it around to achieve a particular mileage. When you go to the history of that vehicle, you will notice that it was bought, parked and kept for some time and they ship it out.
“So they are called imported used vehicles that is Tokunbo because it is not coming as brand new vehicles. But when they want to sell them, they don’t price them as Tokunbo. They price them as brand new vehicles because they know they are buying new cars. They are the people we are concerned with. There is no statistics.
“The cartel we are talking about are not just those bringing in FBU. They operate in a different market, which is difficult to appraise. They are called the dealers of “Tokunbo” cars. But when you see some so-called Grade A Tokunbo, there is no difference between them and a brand new car; maybe because they have just done about 50 miles or 100 miles in America and they ship them to the country under various platforms.
“After being imported into the country, when you open their bonnets, everything is intact. Nothing has been touched. Some still have the nylon inside. These vehicles are classified as tokunbo (imported used) cars, but they are not. They are brand new vehicles. And that is the most difficult market. These people have guidelines that new vehicles must come into the country through company X.
So we have a major issue as it relates to this category of people.
To break the chain of fraud against the industry, therefore, Olaaofe advised the Federal government to decisively shut the nation’s borders against the vehicles.
“But in doing that,” he noted, “it must put certain infrastructure in place. The transport system must be okay and the assembly plants.
“You can give them specific models that they can manufacture or assemble. Let’s say 1.2-liter to 1.5-liter cars. And that is where the majority of our population is. How many Nigerians can afford a V8 vehicle? They will be very scanty. They want to have 1.2-liter to 1.6-liter cars. Let them produce these cars.”
In addition, Olaofe advised that the National Automotive Design and Development Council (NADDC) come up with a vehicle designed for Nigeria.
“Let them come up with a Nigerian design of vehicle specifying the kind of wheel, tyre and rim so that whoever that is manufacturing the equipment can have the full advantage of economy of scale,” he added
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