SA Banks to Finance Buyers of Vehicles Assembled in Nigeria

Stories by Bennett Oghifo

The federal government is in talks with some banks in South Africa to fund prospective buyers of vehicles assembled in Nigeria. The Director General, National Automotive Council, Aminu Jalal, stated this as one of the several ways the government was using to develop the automotive market.

Jalal, who addressed the media in Lagos, recently, said these South Africa financial institutions specialise in funding of prospective buyers of vehicles, adding that this would stop the usual practise in Nigeria where people pay outright for the vehicles they want to purchase.

Also in the market’s development, he said were some tariff issues, explaining that vehicle manufacturing was long-term and very capital intensive. “A lot of the manufacturers actually make more money financing the research of the vehicles than they make in the assembly of these vehicles. There is also after-sales service and sales of spare parts, among others.”
He said to make profit, a manufacturer needed to produce 7,000 to 8,000 vehicles and that anything below would likely result to a loss.
According to him, the ratio of imported vehicles to those assembled in the country would be regulated until zero import was achieved.
Another method that would be used to develop the market was to discourage smuggling, he said and that the Nigeria Customs will check all registered vehicles to ensure they paid the correct duty.
According to him, the federal government, with intent to revive the activities of auto component manufactures, had given N11.5 billion loan to 32 companies to assist them in production.

He said the companies got the loan at an interest rate of 7.5 per cent, listing the companies as belonging to the filter, plastic, tyre, those that mould bumpers and dash board, among others.
He said a quarter of them had repaid the loan but that they had a challenge with competition from importers of similar product from China and India. These products come much cheaper, saying that those who survive were those who trade by the side, importing and producing.
On the resistance of some people to the auto policy, he wondered if Nigerians were comfortable with the importation of cars rather than have them manufactured in the country.
According to him, many countries, particularly in the last couple of months, that have a market, have said they must have an automotive policy, saying the industry was over a hundred years and that apart from the pioneers, Germany, France, Britain and USA, all others that followed have an automotive policy.

He said the reason for this was clear, explaining that it is because auto manufacturing is capital intensive, but that if the industry was developed, then other small materials sectors would be developed.
Jalal said even countries without a market still have a policy that guide the industry.
The Nigeria Auto Policy, he said was a 10-year programme, initially, that had many elements and can be reviewed, and that standards would be established in collaboration with the standards organisation of Nigeria (SON). He said 10 centres would  be established for the purpose, adding that over 170 standards had been adopted, in addition to 104 safety standards and will continue to do more.

But before they were ready, manufacturers  would use the standards of the countries where the vehicles come from, because safety bodies have a way of recognising each other’s safety standards.
Manufacturing plants was also expected to acquire ISO-certification to ensure all their processes conform to international norms.
The manufacturers, he said were expected to have training facilities for capacity building, particularly on maintenance, adding that some universities and technical schools have automotive engineering and technician departments.
On infrastructure development, he said, “We are mindful that we have infrastructure deficiency but if we wait we may never start.”
He said the council was working with state governments to have land “where we can set up workshop for the manufacture of spare parts, particularly in industrial estates. We already have offer from Osun, Delta and we are working to get land in Kaduna, Lagos and Anambra were we already have automobile operations.”

Culled from: http://www.thisdaylive.com