Auto plants may shut down amid poor sales

The Director, Policy and Planning, National Automotive Design and Development Council (NDDC), Luqman Mamudu told The Guardian that the strategy, had resuscitated comatose plants, including Von Automobiles Nigeria Limited...
Automotive plants set up under the Federal Government’s policy on industrialisation are on the verge of shutting down owing to an unfavourable operating environment and low demand for brand new vehicles.According to industry operators, most of the plants are operating 95 per cent below installed capacity. The Guardian’s visits to some of these companies confirmed this.While the National Bureau of Statistics (NBS) says 29 million Nigerians are already jobless as unemployment rate rises to 14.2 per in the fourth quarter of 2016, stakeholders lament that half of the jobs created through the policy have been lost and may have added significantly to the 3.67 million Nigerians whom NBS said became jobless in the last one year.Shrinking sales, caused by lack of vehicle finance scheme and the state of the economy, the inability to access foreign exchange, and harsh operating environment combined to lead investors to the edge of exiting the country or changing their business portfolio, stakeholders said. Apart from Nigerians losing their jobs, the shutdown of operations or exit from the country would worsen the nation’s already ailing economy in many other ways.

The automakers said that the Federal Government might have even neglected its own executive order and the campaign for the patronage of locally made products considering that it imported about 177 armoured personnel carriers while the Senate imported SUVs which could have been produced locally to augment the nation’s economy and further the capacity of the firms.

The policy, initiated in 2013, was hinged on economic development through employment creation, contribution to Gross Domestic Product (GDP), economic linkages, development of the small, medium and micro-enterprises (SME), skills development as well as innovation and technology transfer.

The Director, Policy and Planning, National Automotive Design and Development Council (NDDC), Luqman Mamudu told The Guardian that the strategy, had resuscitated comatose plants, including Von Automobiles Nigeria Limited, ANAMCO, Peugeot, Leyland and other assembly plants such as Innoson, Ford, Sino Trucks. He added that the plan had led to the activation of 25 licences out of a total of 49 issued by the government.

But the Chairman of the Auto and Allied sector group of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Oseme Oigiagbe explained the policy was only a motion without movement.

Oigiagbe lauded the plan but insisted that except the automotive industry is made a priority of government, particularly with the availability of vehicle finance scheme that would spark up consumer demand and ease the vehicle acquisition opportunities, projected objectives may remain elusive.

The Managing Director of Proforce Limited, whose organisation is building armoured vehicles at Ode Remo, Ogun State, Ade Ogundeyin said: “Patronage is a major concern. We had to cut back our workforce by about half. Government needs to patronise made-in-Nigeria vehicles. The plants may close down if the situation persists.”

Ogundeyin, who said the company had been importing vehicles to other African countries stressed that “producing affordable vehicle is possible in Nigeria, but for that to happen, government must address infrastructure deficits and give loan to serious players at about five per cent interest rate.”

Set up 14 months ago, the assembly plant of Kewalram Chanrai Group, which builds Chevrolet vehicles, Foton vehicles, Piaggio Tricycle and Hero Motorcycle in Isolo, Lagos, only built about 1,400 vehicles, tricycles and motorcycles despite installed capacity of 198,000 yearly.

While the organisation said it planned to employ 200 core workers and create about 500 indirect jobs at the plant, it only hired 100 and recently fired about 30 per cent, stressing that the millions of dollar investment was running at a loss.

The Deputy Managing Director of the company Victor Eburajolo said until government worked with banks to make purchasing plans available, not many people would be able to buy cars. “Most of the vehicles we are able to sell now are to companies and government. If the plants keep producing, who is going to buy”? He however said the company remained optimistic and would keep investing in the sector hoping that the economy would pick up soon.

Speaking on condition of anonymity, the spokesperson for a leading brand, which assembles commercial vehicles, said the firm could only build about 50 vehicles since January.The source, who lamented that the company’s sales and employment capacity had been facing challenges, said: “The sector is in a dilemma. At some point we could not find forex at all, now that the challenge is easing, we can’t get naira.