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HomeNEWSNigeriaBig Debate: Auto Industry Stakeholders Divided Over Imported Used Vehicles Ban

Big Debate: Auto Industry Stakeholders Divided Over Imported Used Vehicles Ban


[dropcap]M[/dropcap]ajor stakeholders of the Nigerian automobile industry remain differ over what the federal government should do about imported used vehicles, which is said to account for about 90% of automobile sales in Nigeria.

Their divergent views were openly expressed at a Stakeholders Forum held in Lagos recently, courtesy of the Federal Ministry of Industry, Trade and Investment in conjunction with National Automotive Design and Development Council (NADDC) and the Nigerian Economic Summit Group (NESG).

Views of the stakeholders range from outright ban of imported used vehicles, popularly known in the country as Tokunbo, to tariff increase, closure of land Border and maintaining the statuesque until assemblers are able to produce enough volume to feed the local market.

Mr. Ibrahim Boyi, MD, PAN Nigeria Limited, making his submission during the debate (Copyright: Motoring World Intl.)

Setting the debate in motion, the Honourable Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah told the stakeholders that, President Muhammadu Buhari’s administration does not only believe in the auto policy but also determined to make a success of it.

While the stakeholders agreed on the importance of having a robust auto policy, one issue over which they expressed divergent views is what should be done about imported used vehicles, which control a chunk of the nation’s auto market.

In his submission,  Mr. Kunle Ade Ojo, Managing Director of Toyota Nigeria Limited (TNL), who was one of the five-member Insight  session group, said placing a ban on imported used vehicles should not be the first thing to do.

He explained: “We are importing used vehicles, because local assemblers are not able to meet up the volume of vehicles required by the consumers at the price they can afford. More so, I believe we can’t really go away from used vehicles.

Thomas Pelletier, Managing director, CFAO Automotive Equipment and Services Limited making his contribution: “There is a need to ban importation of used vehicles through land borders”

“Even developed countries allow importation of used vehicles. We are importing used vehicles, because local assemblers cannot produce enough. And because of the high cost of production, prices of locally assembled vehicles make them not affordable for individuals.

“My take, therefore, is that rather than keep looking at placing a ban on imported used vehicles, we should try to build local content, which is the only way the fruit of the auto policy can be reaped.

“Right now, everything is imported. If we can make the tyres, batteries and other parts locally, all of us will be able to use them. What we are doing at the moment is mere assembling, which contribute very little to the economy.”

Dr. Cosmas Maduka, President, Coscharis Group, however ,strongly believe that Nigeria has no reason to keep importing used vehicles, which in his view, amounts to working against and slowing down the growth of the auto industry.

“In the 70s,” he argued, “no one was buying used vehicles. It was all goodwill from government. If the government is willing to make things happen, they must ban importation of used vehicles. Just imagine, as I am speaking here, we have for long assembled 500 cars that cannot be sold.”

Dr. Maduka, in his submission, challenged the federal government to make up its mind as to what it wants to do and achieve.

“And as I have said at several occasions,” he stressed, “no woman will deliver a child without going through pain and without losing blood, even if delivered by caesarean. If you ban the used vehicles now, the auto assemblers will be able to sell more and increase volumes.

“Initially, it will be painful, but at the long run, prices of vehicles will come down, and today’s new vehicles will become tomorrow’s used vehicles. In other words, those interested in buying used vehicles will have them available in a matter of three, four years.”

Mr. Ibrahim Boyi, Managing director, PAN Nigeria Limited and Deputy Chairman, Nigeria Automotive Manufacturers Association (NAMA), however, has a different view. According to him, there is no need banning importation of used vehicles.

He said: ”All the government needs do is increase tariff on used vehicles, assist Nigerian vehicle buyers by supporting  vehicle finance scheme, as spelt out in the policy and as it was in the 1970s and 80s.

“The case is simple. Let us look at what made the first auto policy worked in the 70s and 80s. Had the government then remained steadfast, there would have been no need for another auto policy.

“And I will like to add that you do not just make imported used vehicles more expensive, also ensure that vehicle importation record is linked with vehicle registration. In other words, create a central record that will contain data of vehicles imported, for which the appropriate duties are paid. That will shut the door against vehicle smuggling.”

Mr. Thomas Pelletier, Managing director, CFAO Automotive Equipment and Services Limited, like PAN boss, supports imposing higher tariff on imported used vehicles.

“It is not right for duties on imported used vehicles to be lower than that of brand new vehicles,” He argued. “Rather custom duties on used and new vehicles should be at par.

“Beyond that, there is a need to ban importation of used vehicles through land borders. And the federal government should create an enabling environment for auto finance.”

Mr. Tokunbo Aromolaran, Managing Director, VON Automobile Nigeria Limited, on the other hand, is of the view that progressive ban on used vehicles is the way forward.

He explained: “The fact is that it is abnormal to have a very small market that we have at the moment. It is so, because used vehicles are holding the chunk of the market. For the auto policy to succeed, used vehicles should not be competing with locally assembled vehicles. The least the government should do is impose a levy as envisaged in the auto policy.

“Secondly, assemblers should come up with affordable cars, which can be shunned out in numbers. At the same time, the government should ban used cars progressively, not at once.”

The VON Automobile Nigeria Limited’s boss also suggested a policy that would restrict importation of vehicles via the nation’s sea ports only.

“Smuggling cannot be controlled if we continue to allow vehicles from Cotonou,” Aromolaran added.

Though not among the panellists, also present at the forum were the Group Managing Director of Kia Nigeria Limited, Mr. Jacky Hathiramani, Managing Director of Stallion Motors, Mr. Parvir Singh and Mr. Adrian Fourie, General Manager, Perfection Motors, operators of FAW assembly plant and Mrs. Elisabeth Itegbe, General Manager, Weststar Associates Limited, among others.

Responding to the divergent views of the stakeholders,  the honourable minister expressed satisfaction with what he experienced, promising to access all views objectively and communicate outcome of the meeting as well as the federal government’s next line of action.

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