FG May Review Import Tariff on Vehicles

The federal government may review downward the present import tariff on vehicles, THISDAY investigations have revealed.

The planned review, which is in tandem with the change mantra of the President Muhammadu Buhari’s administration, sources said, may not lead to outright cancellation of the auto policy, which was announced in September 2013.

The imminent review follows complaints over the implementation of the auto policy by the government in the last five years.

The review is expected to reduce the cost of new vehicles and increase the tempo of business in the nation’s automotive sector.

Impeccable sources at the Federal Ministry of Industry, Trade and Investment told THISDAY that the current 70 per cent tariff on imported cars may be slashed as a way to force down the prices of vehicles.

The National Automotive Design and Development Council (NADDC), an agency under the ministry, said last Friday that 14 out of the 25 registered automakers had started assembling vehicles in the country.

The council noted that Nigerians are yet to enjoy the expected benefits of the new policy as the prices of vehicles are so high and are beyond the reach of an average car user.

This explained why many car dealers have had to adopt different strategies to encourage buyers and boost sales in recent times.

The source added that the exercise is likely to come in the form of a review of the import tariff on vehicles so as make it easy for people to buy new cars.

“The decision on the entire auto policy is expected to be part of the economic policy of the government, which will be unveiled as soon as the new ministers settle down,” the source said.

Car prices were increased last year by about 60 per cent shortly after the import tariff went up from 22 per cent to 70 per cent, a situation, which made it difficult for many to buy new cars, just as fleet buyers such as corporate firms have had to cut down on the number of vehicles purchased.

The imposition of the new import tariff, which also affects imported used vehicles, according to the government, is to encourage local assembling/ production of vehicles, with the attendant benefits of creating more jobs and boosting the nation’s economy.

A zero per cent was announced as tariff on imported vehicle components (completely knocked down units) and auto assemblers are also allowed to bring in fully built vehicles at very low import tariff.

However, some stakeholders, including major dealers such as Toyota Nigeria Limited, had complained about the timing of the policy and the seeming poor state of the needed infrastructural facilities for the sustenance of local assembly plants.

The Chairman of the automotive group, Lagos Chamber of Commerce and Industry, Mr. Oseme Oigiagbe, confirmed that the group had written to the Presidency and suggested a number of proposals on the implementation of the auto policy, and recently participated in some meeting sessions called by relevant government agencies/officials on the issue.

He specifically called attention to the issue of unstable power supply and the commencement date for the new import tariff as contentious issues that needed to be urgently reviewed.

An auto expert and consultant, Dr. Oscar Odiboh, said the review of the tariff was expected, arguing that it was hurriedly put in place by the last regime and should, therefore, be suspended.

“The high tariff (on imported vehicles) should make itself necessary; it should not be forced down on the people. It should be suspended and introduced in phases – one to a five-year period,” he said.

Odiboh, who is the Managing Director, Newsletters Nigeria Limited, however, said the auto policy was a necessity for the development of the nation’s industry and the good of the economy.

“The project will take Nigeria from a lower stage to the next level and sit us among top economies of the world,” he stated.

Odiboh, however, warned that unless the implementation of the policy was made systemic and allowed to follow due process, it could derail the project.

“Since this government says it has come to change things, it must change the policy. It is not a yam and beans policy. You must give people time. It requires certain basic things to be put in place. Power is necessary. There are other infrastructural facilities that will make the system run efficiently. Those things must be in place before enforcing the import tariff”, he said.

He alleged that some firms had obtained the auto assembly plant licences to enable them to bring in fully built vehicles at low tariff and labeling those vehicles as being locally assembled.

However, Stallion Auto Group, currently assembling Nissan, Hyundai and Ashok Leyland brands of vehicles, and Dana Motors doing the Kia vehicles locally are optimistic that any review of the auto policy will not in any way affect their plants and business operations in Nigeria.

Managing Director, Stallion NMN Limited, Mr. Parvir Sighn, said, “As far as the group is concerned, we have no doubt that the government will sustain the policy. Anywhere in the world, the automobile industry is a high contributor to the Gross Domestic Product. It is also a significant employer of labour. The state of the auto development of a nation is a reflection of the development of that country.

“The policy will be sustained. There is no shortcut to it. You need a robust industry to support the high demand for vehicles in the country. The demand is there.”

Spokesperson for Kia Motors Nigeria, Mr. Olawale Jimoh, said the company had in conjunction with its technical partners, Kia Motor Corporation, invested billions of naira in the local assembly plant and had in the process created jobs for Nigerians.

The government said the response of the automakers to the auto policy, particularly the call for the establishment of assembly plants in Nigeria, had been overwhelming.