LCCI says automotive policy is outdated, eroding jobs

National Automotive Policy

The Lagos Chamber of Commerce and Industry (LCCI) has called on the Federal Government to urgently review the National Automotive Policy because it is not in tune with modern day reality and is leading to job losses.  

The Chairman, Auto and Allied Sector Group of LCCI, Bambo Adebowale, who made the call on Thursday in Lagos, said the policy had become outdated, led to job loss and reduced revenue generation to the country through the ports.

Adebowale who is also the General Manager, Nigeria/Ghana, Mitsubishi Corporation, said the policy should be reviewed to align with the present macroeconomic reality of the country.

He said the review was necessary because when the policy was formulated the exchange rate was N158 to a dollar and inflation rate was at single digit.

It will be recalled that the National Automotive Policy was introduced in October 2013 by former President Goodluck Jonathan administration, to revive the ailing auto industry.

The objective of the policy was to encourage local manufacturing of vehicles and discourage importation of cars as well as gradually phase out used cars popularly known as ‘Tokunbo.’

Statistics released by the National Bureau of Statistics (NBS) on vehicles imported through the Nigerian Ports Between 2012 and 2017 showed that 269, 386 vehicles were imported in 2012, while 280, 226 and 247,932 came into the country in 2013 and 2014, respectively.

In 2015, the number of vehicles imported declined to 131,994, while 105,189 vehicles were received at various terminals in 2016.

Adebowale said, “The N1.5 million car promised to Nigerians never materialized, and that was when naira to dollar exchange rate was N158. With the present exchange rate, how many Nigerians can actually afford a new assembled car?

“Moreso, we still do not manufacture vehicles, we only assemble them, with most of the finance and technology for assembling vehicles still low and belonging to foreigners.

“Some items like rubber, plastics, glasses that are critical to automobile production were part of the 41 items banned from accessing foreign exchange through the official market.

“The whole value chain of automobile industry needs government support to grow, so that vehicles, spare parts and even transportation can be made affordable for Nigerians.”

He said the National Automobile Design and Development Council (NADDC) issued licenses to over 50 auto assembly manufacturers for a total installed capacity of 410,000 vehicles.

“Morocco has three assembly plants with an installed capacity of 400,000 and is planning to raise production to one million units by 2020; this shows a higher level of efficiency in the country,” he said.

He said 10,673 vehicles were assembled in 2016 and fewer numbers in 2017, and that local assembly was unlikely to improve without a structured support and policy change.

The LCCI boss noted that in reviewing the automotive policy, the government should consider finance, improved technology in automobile development, tariff reduction and the changing landscape from combustion engine.

He said the review would restore jobs, shore up government’s revenue, boost the growth of the automobile industry and activities in the maritime sector.

Data from the National Automotive Council (NAC), reveals that the automotive Industry has installed capacity to produce 108,000 cars, 56,000 commercial vehicles, 10,000 tractors, one million motorcycles and one million bicycles annually.

It said capacity utilization of vehicle manufacturing plants in the country was below 10 percent; about 40 percent for motorcycle and bicycle/components parts manufacturing. 

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