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New auto policy ready in six months, says Fed Govt

By The Citizen

The Federal Government has said details of its reviewed automotive policy, which will include stiffer measures on used vehicle imports, will be unveiled in the next six months.

The government spoke through the Director-General, National Automotive Design and Development Council, Mr. Aminu Jalal, at an automotive industry forum in Lagos on Friday.

He said the review would be coming about two years into the Muhammadu Buhari administration.

The Minister of Industry, Trade and Investment, Okechukwu Enelamah, had announced in July that the government would review the policy in order to set an effective implementation framework and incorporate a number of suggestions offered by local automakers and other stakeholders.

Jalal specifically said the government would introduce stringent regulations in the next three years to control the sale of imported used vehicles popularly called Tokunbo.

He, however, said since used cars constituted about three-quarters of the total automobile market in the country, an outright ban might be difficult.

In order to control the influx of Tokunbo vehicles into the country, he stated that the government would ban the importation through land borders and enforce the presentation of roadworthiness certificates on such vehicles from their countries of origin before allowing them into the country.

He said, 'We want people to have value for their money. There is no point buying a vehicle and from the first day, you are at the mechanic. We want to make sure these vehicles have roadworthiness certificate from their countries of origin.'

The Federal Government under Goodluck Jonathan introduced the auto policy in the last quarter of 2013, which included the imposition of 70 per cent tariff on imported cars, both old and new.

While importers of new cars are currently paying 70 per cent of the cost of their vehicles as import duty, owners/importers of Tokunbocars are only charged 35 per cent.

Although the implementation of the other 35 per cent import duty on used cars ought to have commenced last year, the government has yet to enforce it.

Meanwhile, stakeholders in the industry comprising the automotive component manufacturers and owners of vehicle assembly plants have said poor implementation of the auto policy is driving down the volume of their products.

At the forum organised by the NADDC, the Nigerian Investment Promotion Council and the Growth and Employment in States 3, a Department for International Development programme, they called for strict regulations on the importation of vehicles.

The Chief Executive Officer, Truckmasters Nigeria Limited, Mr. Tony Areyeka, noted that the only way to develop local component industry was to totally scrap the manufacture of semi-knocked down vehicles, as well as encourage local automakers/assemblers to bring in completely knocked down vehicle components and provide incentives for committed vehicle assembly owners.

He called on the Federal Government to collaborate with automakers to develop models that would be cost-effective and affordable to buyers.

'For me, let us scrap the SKD. The only way to develop local components industry in Nigeria is through the CKD,' he added.

The President, Coscharis Group of Companies, Cosmas Maduka, insisted that a ban on imported used cars would be one big incentive to increase the production of and local demand for new ones.

The Senior Consultant, GEMS 3 (DFID), Mr. David Brown, noted that the international perception of the Nigeria as a low-volume domestic market would affect its outlook as a growing African market for new vehicles' export.

To attract investment in the industry, he suggested a consistent communication with Original Equipment Manufacturers on the improvement in the ease of doing business as well as milestones that had been achieved in the implementation of the automotive policy.

'The probability of getting a high volume is quite low and the way to go is what has been suggested in the government policy - to focus on the CKD. That will stimulate demand to help local suppliers and will start to take volumes up to the point that some component suppliers from international companies will invest,' he said.

Apart from road shows, the Executive Secretary, Nigerian Investment Promotion Commission, Ms. Yewande Sadiku, who was represented by Reuben Kifasi, said the council would establish a dialogue with global OEMs and local investors in the industry for targeted investment in the coming year. - Punch.