Dangote and Peugeot to start assembling cars by Q1 2019

Come early next year, PSA Peugeot Citroen will commence the assembling of cars in Nigeria alongside its local partner, Dangote Group.

Dangote-Peugeot Automobile Nigeria Limited (DPAN), a joint venture of PSA Peugeot Citroen, Dangote Group and five state governments in Nigeria (including the Kaduna State Government) will see about 3,500 cars assembled in 2019.

Jimi Lawal, an advisor to the Kaduna State Governor confirmed to Reuters yesterday that the assembly plant will indeed commence operation between January and March 2019.

“The first vehicle should come out by the first quarter of next year. We are hoping that the factory will be completed by December. The land has been identified … we have advertised for a contractor that will build the factory.” – Lawal

The assembling plant will be located in Kaduna, Northwestern Nigeria.

Nigeria has a huge auto market with its nearly 200 million population. Unfortunately, “limited bank financing and the absence of an industrial policy has stunted growth”, Reuters reports. Only a few new cars are sold, even as reliance is mainly on the importation of second-hand cars from Europe and the Americas.

Thanks to this partnership, Peugeot will locally assemble its trademark 301 Sedan in small volumes at the plant operated by DPAN. The company said the cars “will be produced from semi-assembled kits of parts shipped from Peugeot’s plant in Spain.”

There are also plans to begin the production of additional models such as 508 and 308 Compact, just as Peugeot hopes to increase production volumes to as much as 10,000 in coming years.

DPAN will commence operations with ₦3.5 billion equity and about $5 million-worth of working capital. There are plans to raise additional capital.

In the meantime, Dangote will own a majority stake in DPAN while Peugeot Citroen will own 10%. Peugeot will also operate the plant.

Recall that Dangote had in recent times, pledged ₦11 billion in a bid to acquire a majority stake in Peugeot Automobile Nigeria (PAN) from the Asset Management Company of Nigeria (AMCON), an exercise that remains unresolved till date. AMCON acquired a majority stake in PAN in 2012 after taking over the company’s debts worth about ₦30 billion owed to some Nigerian banks.

PAN 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. The company, however, ran into trouble barely two decades after commencing operations.