Updated Jan 1, 2015: The Federal Government has now moved the date of Increase in Tokunbo cars importation to 70% (additional 35%) to April 30th 2015. This is now the third time they are moving this date and I am betting the impending elections in 2015 must have been factored in. Below is the article we wrote when December 31st just before the date was moved.
The Federal Government is set to increase import duty on second-hand cars by another 35% from Thursday January 1,2015 in fulfillment of its so-called National Automotive Policy. This increase is the second phase after it increased by 35% in February 2014. This now brings to tariff to 70% in a little under one year for poor Nigerians who cannot afford to buy brand new cars.
The guys who seem set to benefit from this are the local manufacturers of vehicles such as Innoson, Nissan etc. and the Minister of Trade who for some inexplicable reasons believes the timing of the policy is right. You wonder if the conditions are actually right to implement such a policy and why no incentives are available for local car buyers. The economic outlook for 2015 also look grim for most people with the effects of the falling oil price on the horizon, exchange rate now at N190 at the black market and likely to hit N200 in the near future. Just how does the government introduce such a controversial policy at this time? How many locally produced cars are available in the market? Is it enough to cater for the rising demand? What models of vehicles are available and do we have cars that are absolutely made for the middle class?
The government and the rich will obviously not be affected as much as the poor considering that they already are used to buying brand new vehicles. It is the poor looking to step up who now have to face up with the choice of buying untested locally made vehicles or stump out extra 70% cash to buy second-hand vehicles. Sure, locally produced vehicles does bring some pride to a country but that’s pretty much where it gets to. The purported jobs that will be created is still medium to long-term and can’t be guaranteed to be sustained. Can the cars compete with their foreign counterparts? How long can they face up to the harsh economic realities of manufacturing in Nigeria? With poor power supply, bad roads, poor quality of labour and huge need for importing parts required to assemble these cars, can the industry survive? Will pricing be controlled or allowed to be set by manufacturers just the way Cement has worked? These are all questions left to be answered!