Nigeria’s automotive industry is in a state uncertainty due to prolonged delay in enacting the required law to give investors the right direction.
Head of the Auto Sectoral Group of the Lagos Chamber of Commerce and Industry (LCCI), Mr. Kunle Jaiyesinmi, stated this, noting that the industry was being allowed to stagnate and made it difficult to galvanise the overall development of the economy.
Jaiyesinmi who is Deputy Managing Director of CFAO Motors, spoke in Lagos on the sidelines of the 2024 Nigeria Auto Industry Awards organised by the Nigeria Auto Journalists Association (NAJA).
He said, “For now we are in limbo. We don’t know what is happening to the (auto industry) policy; whether it’s with the Executive or it has gone to the National Assembly. We don’t have information on the stage that the policy is. I think NADDC is coming up with a stakeholders’ meeting, maybe they would give us a very detailed information on the policy.”
In his assessment of the performance of the business this year, he lamented that the macroeconomic challenges, including the high exchange rates and inflation were adversely affecting vehicle sales.
He said, “2024 has provided a topsy-turvy ride looking at the state of the economy. The purchasing power has been so much eroded due to the depreciation of the naira the exchange rate.
“Prices have risen to a level that most private consumers cannot really afford a new car. You notice that the major corporates are really suffering. You can imagine how much they lost in terms of exchange rate.
“So that has really impacted the procurement of new vehicles. We have more of automobile maintenance service than new sales.
“If you look at the market figure, it has so much reduced compared to what we had been having when the exchange rate was around N450, N480. So it’s not been a very good year for automobile business.
Jaiyesinmi also spoke on the high interest rate, which is over 33 percent, as well the recently announced government-backed N20 billion auto finance.
He said, “Automobile loan is a no-go area for consumers. It’s a bit tough now. Reliance is on government now and it’s not everybody that can do government business.
“We are just looking at 2025 to be a better year going by the appreciation of the naira in recent times. We are just praying that it can be sustained. If we are able to get that into the New Year maybe vehicle prices would reduce and based on the government providing very good enabling environment for businesses to thrive.”
Speaking on the N20bn auto finance scheme by the credit corporation (CreditCorp), he said, “The N20bn scheme is even belated because when the Auto Policy started about 10 years ago – the 35 percent tariff being charged on fully built vehicles – the understanding we had then was that part of it would go to the auto financing and the other part would go to automobile assemblers’ facility.
“In 10 years, nothing happened and we know how much has been collected by the Federal Government from that levy.
“So N20bn is a paltry amount and the scheme is coming up a bit late. Looking at the local assembling, how many assemblers are we having in Nigeria? Almost all of us who started eight, nine years ago have really closed shop,” he said.
He however expressed optimism that the new Minister of Industry, Trade and Investment, Dr. Jumoke Oduwole, would turn things around.
“I believe she should be able to drive this policy. She should try as much as possible to run away from the era of deceit. She should face reality and I believe as a realist, her tenure would portend a good trend for the automobile business,” he said.
