The 70 per cent tariff imposed on imported cars aimed at boosting local production under the Federal Government’s auto policy had its most effect this year, Nigerian Ports Authority (NPA) has said.
According to the Managing Director of the Ports Authority, Ms Hadiza Bala-Usman, the policy reduced the number of used vehicles brought into the country this year by a quarter and fuelled smuggling from neighbouring Benin.
Car imports fell to 70,453 units in the first 10 months of this year, a 26.8 per cent reduction on the same period of 2016, Nigerian Ports Authority (NPA) figures showed.
The government imposed a 70 per cent tariff on imported vehicles in December 2015 as part of attempts by President Muhammadu Buhari to stimulate local production.
Before that, the tariff was 20 per cent. Though she did not support her claims with figures of the local assemble capacity, Hadiza told Reuters that the policy meant local demand for cars was not being met by the local assembly plants.
“We appreciate the need for the government to have assembly and manufacturing in Nigeria but we are concerned that the capacity of the Nigerian market is beyond what is said to be assembled in Nigeria,” she said.
“We have seen a lot of cars being smuggled through neighbouring countries – mainly from Benin,” she added. Benin maintains low import tariffs compared with Nigeria, which for years been beset by chronic congestion in its ports.
Vehicle imports fell to 96,222 units last year from 131,994 in 2015, according to port figures. Usman said the ports authority expected a further drop in 2018 to 67,400 units.
But Sunday Telegraph reports that The tariffs imposed in 2015 attracted U.S. car maker Ford, South Korea’s Kia Motors and Nissan, Germany’s Volkswagen, which announced plans the same year to set up assembly plants in Nigeria, and a couple of days ago Japan Mitsubishi. Many Chinese manufacturers are also assembling the vehicles in Nigeria at SKD level, while a wholly Nigeria company Innoson Vehicle Manufacturing is also producing from Nnewi.
All of them are complaining of one thing, lack of patronage.
However, experts attributed this to the economic recession in 2016 due to low oil prices and a currency crisis. Nigeria exited recession in the second quarter of this year, growth is fragile and limited financing for new cars has stunted sales.
Ford’s local partner said it assembled 739 units of its Ranger pickup in 2016 and this year. Its plant in Nigeria’s commercial capital, Lagos, can assemble 5,000 cars annually.
Kia Motors, which has a plant in Lagos with a 20,000 vehicle capacity, said it assembled 1,800 units this year but did not give figures for 2016.
And a representative of Stallion Motors, Volkswagen’s local vehicle assembly partner, said work stopped around August due to issues related to the exchange rate and production costs.
He said up to 30 vehicles were being rolled out monthly, although assembly did not happen on a regular basis.