N1.8TRN OF US USED VEHICLES IMPORTED TO NIGERIA IN 6 YEARS

Without any laws guiding the automotive sector in Nigeria to buy new cars at affordable rates, they are still relying on used cars from the US for inexpensive alternatives. The National Bureau of Statistics (NBS) shows this data with reports over a five year period between 2017 and 2022, of the N2.5trn, N1.8trn was from the US. With an annual breakdown of N145bn in 2017, N96bn came from the US, the statistic being “used vehicles with diesel or semi-diesel engine, of cylinder capacity >2500cc”. 2018 came with N180bn of N269bn imported from the US, N455bn in 2019 of N580bn, N529bn of N718bn in 2020 and slightly dropped in 2021 to N399bn of N617bn. in the first nine months of 2022 N205bn was imported from the US out of N235bn imported globally. Specialists in the field gave the ebb and flow of the importation market to no formal policy from the government on the matter. There are very few cars produced in Nigeria, and the prices are above the costs that an average Nigerian can afford.

The NADDC ( National Automotive Design and Development Council) Director General, Jelani Aliyu, has said that the automotive sector attracted $1bn of investments in 2022 despite the local assembly plants not operating at their full 400,00 annual production capacity.

The view from the Managing Partner at Transtech and a past Director of policy and planning at the NADDC, Luqman Mamudu has said that there is a larger variety of vehicles to chose from, coming out of the US, and the standards are high for the quality of the product also. This, in their opinion, is the reason behind locals leaning towards the imported vehicles from the US.

He said, “These factors and a few others like the high population of the Nigerian diaspora in America that make home remittances in the form of vehicles, account for observed dominance in the Nigeria market.”

Looking at the news that the import throughout the period being under review, Mamudu said “On the whole, it is a reflection of the gradual reversal of the NAIDP. It had inbuilt protective and incentive measures which tended to discourage importation; especially of used vehicles. For instance, an import tariff of 35 per cent was placed on fully built commercial vehicle imports whereas 0 per cent and 10 per cent only were charged on imported Complete Knocked Down (CKD) and Semi-Knocked Down (SKD) respectively”.

“By 2020/21 this was crashed to 10 per cent for all Fully Built Vehicles (FBU) for all commercial vehicles including used ones. Similar measures were taken for cars. Import duties for fully built cars crashed from 70 per cent to 25 per cent. The result was that licensed assemblers laid off their workers and abandoned their factories to join jubilant traders to import massively. The traders, including the association of licensed clearing agencies, have never liked the NAIDP anyway”.

“Government’s excuse for this action at the time was to make used vehicles affordable to the masses but prices continued to soar because the NAIDP never exclusively restricted the import of used vehicles. It was a lie sold to the government to open up the borders for imports.”

He said the most important part of the NAIDP was to emphasise demand for locally made vehicles, which it hasn’t.

He said, “This was the automotive asset credit acquisition scheme for which CBN had granted a provisional license in 2016. It was to allow Nigerians, especially fleet owners and bus operators, to buy vehicles in installments at cheap interest rates. Other critical components of the program like Quality assurance projects were equally downgraded in terms of priority.”

He noted that if Nigeria really wants an import bill with a balancing payment position within the automotive sector, the NAIDP needs to be looked at again for a valid source of employment and to add value into the industry locally.

“What seems to be vexing to importers of fully built vehicles is the protective tariffs. This can be de-emphasized without undermining the industry but the credit purchase scheme is a must. Countries that aspire to grow a local automotive industry must make them affordable to their populace in prices and terms. Otherwise, the imported used vehicles will continue to undermine the industry. New vehicles cannot compete,” he added.

Source: Dailytrust, January 2023