Scarcity of forex cripples vehicle spare-parts business
The heightened scarcity of access to foreign exchange and the ban on importation of vehicles through the land borders have increased the cost of the vehicles sparepart trade, some dealers have lamented.
The concerns raised by some dealers in Abuja, Nasarawa and Kaduna states last weekend corroborates similar concerns raised by vehicles owners and drivers too.
At the Utako mechanic area, a dealer Mr. Ugonna Chidi who sells shock-absorbers, lubricants and other car parts said the wholesale prices for them have risen because the used spares popularly called ‘Belgium’ grades, and the new ones are not manufactured in Nigeria.
He said, “The spare parts are mostly imported at the mercy of the scarce forex from the US, China and even Benin Republic. A set of new shock-absorbers of Toyota Camry which sold for N26,000 early last year, is now over N40,000, and we hardly get patronage.”
At the tyres and car accessories line in Mararaba, Nasarawa state, Mr. Chris Ndulue said tyre sellers are worst hit by the multiple economic constraints. He noted that while high forex rate has helped to increase the prices of tyres, the ban on vehicle importation through the land borders has dealt the sellers another blow as it completely cuts off their supply of ‘belgium’ tyres and vehicle accessories brought in through those imported vehicles.
“A brand new tyre now sells up to N26,000 as against N15,000 last year. The ‘Belgium’ grade is also not an option as the scarcity caused by the auto ban has hiked the price too,” he said.
Speaking on the implication, Malam Auwal Rabiu who sells vehicle parts at the Keffi highway point of Nyanya, Abuja said the market is being crippled by the hike in prices of parts as they are daily losing customers.
“Many customers come to buy on credit now and because you don’t want the items to rust in the shop, one has to give them out. With the delay in payment, we can’t restock our shop and the thought of making profit is fast fading out,” he lamented.
Johnson Moses who sells spare parts at Apo Mechanic village said the patronage of spare parts is low. “Before you would see car owners buying spare parts but now many are opting for repairs,” Moses said.
At the popular Panteka Market in Kaduna, spare-part dealers have their own fair share of the struggle tale. Mr. Amos Yaro who sells batteries in one of the many public-owned shops told one of our reporters on phone that his business since January 2017 has been dull because his customers could not put up with the critical rise in the cost of car batteries.
He said a Kymbo battery that sells for N12,000 last year is now up to N25,000. “Some motorists now resort to patronising battery chargers who only give temporary boost to the failed batteries. We provide credit to those we trust, but they too are not paying,” Yaro explained.
For the motorists, Steve Bulus a commercial bus driver who plies the Mararaba (Nasarawa) Berger (Wuse-Abuja) route said they have factored the high cost of spare parts and fuel and have reviewed the price of fares.
Most of the dealers called on government to intervene by making the dollar more accessible at the banks so the hike at the exchange bureaus could fall, and spare parts dealers could afford to trade better.
An executive member of the tyre dealers association in Kaduna metropolis, Taiwo Oladele said the availability of forex alone could crash these prices and bring them to a nearaffordable level and boost the economy.
Oladele who admitted that some members are already closing their shops also urged the National Automotive Design and Development Council (NADDC) to stimulate local brands like Innoson, and vehicle dealers like Coscharis, Elizade, Globe Motors and National Truck Manufacturing Company (NTM) in Kano to invest in the local production and assembling of spare-parts for popular vehicle brands.
On what Nigeria is doing about the local manufacturing of spare parts instead of relying on importation, an assistant director in the Information and Public Relation Unit of the Council, Mrs Susan BisongTaiwo said local content development is one of the key elements of the auto policy.
“The National Automotive Design and Development Council (NADDC) initiated the Nigeria Automotive Industry Development Plan (NAIDP) basically to discourage overreliance on imported auto component parts and vehicles to encourage local production of automotive products in Nigeria. Presently there are about 50 local content manufacturers in the country and a lot of foreign investors have also expressed their readiness to explore the possibility of manufacturing auto components locally with the intention of supporting Original Equipment Manufacturers (OEMs)”, she said.
She added that NADDC established the Auto Development Fund (ADF) to assist local manufacturers of auto components with soft loans to enable them acquire the equipment and skills needed for production of auto spare-parts as well as expand their factories to increase the volume of production which would in turn deal with the issue of high prices of automotive parts caused by low production volume. “About 30 companies (local content manufacturers) have benefited from the ADF scheme”, Taiwo said.
Whether this efforts will translate to seeing companies in Nigeria producing spare parts and at a lower price to cushion the high prices of spare parts experienced presently, only time shall tell.