Peugeot Nigeria bounces back
By Temitayo Odunlami
After over a decade of being in the business red, PAN Nigeria Limited is gradually bouncing back to black. Managing Director and Chief Executive Officer of PAN, Alhaji Ibrahim Boyi was all enthusiasm last Thursday when he visited Media Trust to share the automobile plant’s progressive return to glory.
PAN, formerly Peugeot Automobile Nigeria Limited, was incorporated on December 15, 1972 as a limited liability company with an authorized share capital of N3 million. It commenced full operations on March 2, 1975, while the erstwhile Head of State, General Yakubu Gowon, commissioned the assembly plant on March 14, 1975.
After about two decades of smooth operations, during which the Peugeot brand was a favourite buy by consumers and was highly patronised especially by government agencies, the company ran into stormy waters due to what Boyi called government’s policy somersaults and inadequate tariff protection for local assembly plants. Federal and state governments began to shun PAN’s Peugeot products and began opting for imported alternatives.
By the turn of the decade, the company’s fortune had begun to slide. By last year, PAN’s revenue generation profile had dropped to a meagre N2 billion per annum from about N30 billion a decade ago. Its market share dropped drastically from 20% to only 2%, with car sales figure declining from N31.7bn in 2007 to N1.96bn in 2103. From selling up to 11,768 vehicles in 2007, it was able to muster only about 1000 vehicle sales last year.
At the height of its glory, the automobile company could boast of not less than direct 4000 workers. By last year, the number had been reduced to less than 300, as its financial health worsened over those years and job security became increasingly uncertain.
With its strategic management getting poorer, its dealers, service centres and about 70 local auto component manufacturers severed their relationship with it and shifted their support to other brands. Only a few dealers remained loyal. It wasn’t from government agencies alone that PAN suffered from patronage; even private car consumers shifted their brand loyalty to competitive brands like Toyota ad Honda.
Worse, PAN Nigeria’s nomenclatural parent company, Automobile Peugeot France also, in 2010, suspended the relationship and agreement the two shared. The consequence was that PAN Nigeria stopped getting supply of parts and the benefit of staff training from Peugeot France.
With a crippling debt overhang of N30 billion by 2011 and no prospect of a private investor willing to risk his money in turning it around, PAN Nigeria seemed headed for the junkyard. Then came in, in 2012, the Asset Management Company of Nigeria ( AMCON), which acquired PAN Nigeria’s debts and converted a portion of it to equity. In what looks like privatisation in reverse, AMCON acquires a controlling 80% shareholding in PAN Nigeria Limited, and assumed board and management control. It constituted a new board, led by Muhammed Munir Ja’afaru and, in 2013, appointed a management team led by Boyi as the CEO. In the investment mix is also the Bank of Industry, which owns a 1.7% share.
AMCON’s controlling ownership is, of course, not expected to be permanent. The major mandate it has given the new management is to turn around the ailing company and make it attractive to investors. The managers are charged with, among other goals, regaining PAN’s lost market share, restoring the commercial and technical agreement with Automobile Peugeot France and revamping the dealership network.
Boyi and his team, who assumed office in November last year, have since two months ago set their nose to the production grindstone on that mandate, with a target of 3000 cars per annum. Once again, the PAN plant is churning out vehicles, and this time, Boyi is optimistic, production will be seamlessly permanent.
The CEO’s optimism is buoyed by certain factors that favour the company. One, its financial complexion is looking a lot healthier now after AMCON cleared N12 billion of its debts and the management has been able to rearrange the rest in longterm servicing. The arrangement frees the management from any immediate debt strangulation and creditor-stress.
Again, the management successfully obtained a refinancing facility of N2 billion it deployed as working capital. The company is servicing the facility already. The management has also been able to win back the favour of Automobile Peugeot France, with which it has renewed its partnership agreement. The French company took up some of the cost of reviving PAN Nigeria’s plant in Kaduna.
Boyi said that PAN is keying into the federal government’s new automotive policy, which he described as holistic and very encouraging for local vehicle production. Very soon, he promised, Peugeot Nigeria will, once again, outrun its competitors, as was the situation in the 1970s and 1980s. He said the brand retains all the excellent features for which it was renowned.
One, he listed, is a good maintenance culture that ensures a minimum of 10,000 kilometres or seven months usage before the first servicing for whatever model of Peugeot. Then, the car is warrantied for three years after purchase. The company has re-opened maintenance centres across the country and rebuilt its dealership network, all of who it is equipping with genuine spares and training to enable them handle current Peugeot technology.
The Boyi team’s turnaround assignment is made easier by the fact that PAN Nigeria’s residual qualities were unaffected by the downturn it experienced. Of all the assembly plants in Nigeria, all of which suffered serious distress, only PAN Nigeria’s plant has remained functional. The good news has made revival easier and less cost consuming. “It remains the best and most comprehensive assembly plant in the African West coast,” the PAN boss enthused.
The company also still possesses a small band of loyal, trained staffers to leverage on as a pillar of strength. To boot, many car users still can’t divorce themselves from their deep emotional attachment to the Peugeot brand, a factor that the managing director believed is driving sales and its general successful comeback. It is beginning to enjoy again government support, while patronage of its ambulance model has been heartwarming.
The sentiment has also helped in concretising the loyalty of dealers who had faithfully stayed with the Peugeot business during the hard times and won back those who strayed. One of the faithful is Chief Andrew Okocha, proprietor of A.C. Okocha Motors, who accompanied Boyi on the Media Trust visit. The veteran car dealer, expressing delight at the revival of PAN Nigeria, told Sunday Trust he has been distributing Peugeot vehicles for more than 30 years.
The new management is working at a robust business philosophy that goes beyond car sales in generating revenue. One initiative is that PAN Nigeria is throwing its plant open to other vehicle assembly firms for commercial use. It is also providing a wide, effective transportation solution that includes training of drivers, and automobile engineers and technicians. It already has a well-equipped training school in Kaduna for the purpose.
As PAN Nigeria bounces back, Boyi wants the federal government to sustain its vital automotive policy to warrant competitiveness for local assembly and local content addition, police the borders more effectively to control smuggling of new and used vehicles, and improve efficiency of local infrastructure and logistics.