Automative Policy Lifts Motor Assembly Sector by 26%

Following the introduction of the automotive policy by the federal government, the motor vehicles & assembly sector grew by 26 per cent y/y in 2014, data from the National Bureau of Statistics (NBS), has revealed. Automotive policy has been at the forefront of the Nigeria Industrial Revolution Plan (NIRP). Prior to the introduction of the policy, industry data showed that the country’s annual spending on vehicle imports was estimated at $6 billion. However, there has been a 20 per cent drop in the volume of imports since the first phase of the auto policy was introduced in July 2014. As a result of the development, the National Automotive Council (NAC) last Monday launched the national automotive repository portal. The portal according to the NAC had been set up as a database where vehicle identification numbers for locally assembled and imported vehicles in the country will be stored. The portal, it stated, will also facilitate the tracking and auditing of vehicle registration within measures to control dumping and smuggling. To encourage local assembly of cars, the federal government had announced plans to impose additional levy of 35 per cent on imported used vehicles (tokunbos), raising the total tariff to 70 per cent. The date of implementation has been put back three times. It was originally set for July 2014, and has since been shifted to January, April and now July 2015. The NAC had also recently developed a few projects including the Local Automotive Components Development Fund in conjunction with the Bank of Industry. Through this fund, N10bn ($50 million) has been disbursed to 27 companies. Despite the recent growth, analysts at FBN Capital believe the sector faces multiple challenges, one of which is poor