The Nigeria Auto Policy Revisited
by Femi Ogunji
Ask any Nigerian on the street about the Federal Government’s auto policy and you will hear them say it took effect last year…and is also the reason why many people are unable to buy ‘tokunbo’ cars today. However, what is popularly referred to as the auto policy is actually more accurately called the ‘increase in import duty tariff’ Nigeria has had an auto policy as far back as 1993 when the National Automotive Policy was launched and the National Automotive Council was launched.
The current thrust increased the import tariff on imported cars – or more appropriately, fully-built units (FBUs) from 20% to 70%! Eventually after much hoo-hah by the importers, clearing agents and others who felt their bread was being stolen, the government reverted to a phased increase of the import tariff; on July 1st 2014, the tariff was cut to 35% and will be further raised to 70% effective 1st April 2015. To the lay man, this means if you import a car worth N1, 000,000, you will have to pay a duty of N700, 000 on it.
The essence of all these measures is to promote local manufacture of automobiles. Some have argued that the benefits will not be to any local end-users as this will allow the major international automakers to milk the Nigerian populace dry while conniving with their Nigerian front men to sell us made in Nigeria cars of lesser quality than obtains in the US, Europe or Japanese markets at prices higher than those markets. Perhaps, the high costs of these made in Nigeria cars – as Nissan, Hyundai and Kia amongst other have begun assembling and selling made in Nigeria cars – justifies the fears of these commentators.
IVM vehicle offerings
However, in all these, one bright light is the emergence of Innoson Vehicle Manufacturing (IVM) as a serious player in this industry. The irony is that prior to the recent policy thrust, IVM had been assembling and selling cars ‘made in Nigeria’. However, due to the usual Nigerian indifference to all things Nigerian, few people took notice of the man from Nnewi untill now.
Suddenly, everyone wants to view IVM’s product offerings. Truth be told, IVM , in terms of manufacturing process, is at par with the international players in this industry. They all import completely knocked-down kits (CKDs) from suppliers in China, Korea, Japan and elsewhere and assemble them in a plant within the shores of Nigeria. So, technically they are made in Nigeria. IVM’s designs have greatly improved since its assembly plant begin assembly and look as good as most cars produced elsewhere in the world and certainly better than some produced in some parts of the world.
However, IVM’s coup de grace is their pricing; because, let’s face it, the average Nigerian might fancy a Range Rover but he will only buy what he can afford. IVM offerings are among the lowest priced in the categories and they handle and perform at almost the same level as imported brands. And in a market where the consumer is king, offering the best price point might, in the long run, be the best ace one can play. And IVM is doing just that!
Mr. Femi Ogunji is a Lagos based IT professional. He can be reached on [email protected]
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