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Thursday, 19 June 2014

BUSINESS/IMPORT

Nigeria: New tariff; auto dealers cut imports by 50%
By Comfort Oseghale

PHOTO: PUNCH
Less than two weeks to the July 1 deadline for the enforcement of a new duty on imported vehicles, auto dealers have cut their orders by 50 per cent, COMFORT OSEGHALE reports.

 
Berger Yard located along the Apapa/Mile 2 Expressway is arguably the biggest market for imported used vehicles in Africa. But the fate of about 12, 000 people directly or indirectly involved in the sale of tokunbo vehicles, as the used vehicles are popularly called, now hangs in the balance at the ever busy market. 

The implementation of the 70 per cent tariff on imported vehicles coming in less than two weeks will determine if these men will remain in business or be thrown into the already burgeoning population of the unemployed.
Car dealers and importers have expressed apprehension over the implementation of a 50 per cent hike on the duty and levy payable on imported vehicles on their business.
Already, many of the dealers, who spoke with our correspondent, said they had reduced their orders for vehicles by half while awaiting the response of the market to the new import duty regime.
In November 2013, the Federal Government had raised the import tariff on fully built cars and used vehicles from 20 per cent to 70 per cent. It also announced a zero per cent tariff on completely knocked down vehicles as part of the new national automotive policy aimed at encouraging local production of vehicles. The new duties and levies also affected imported new tyres.
Out of about 800,000 vehicles being imported into Nigeria annually, only about 50,000 are said to be new. Others are tokunbo vehicles. About 90 per cent of these vehicles are reportedly brought in through the ports.
The high cost of clearing which resulted in a corresponding increase in prices of vehicles is said to be responsible for the lesser number of vehicles now coming through the Lagos ports as against the higher number being reportedly smuggled into the country through the borders.
Already, the first phase of the policy involving a 35 per cent duty increase came into effect a few months ago. The second phase of the policy which is expected to take effect from July 1, 2014, will involve another 35 per cent increase in levy.
An importer, Mr. Maduka Mbah, described the policy as one meant to satisfy a few people.
He said, "I have read reports that a Nissan made-in-Nigeria car was given to President Goodluck Jonathan. I don't believe that car was made in Nigeria. How can that be possible when our steel industry is still comatose? If indeed cars are being made in Nigeria, then they must be in the market.
"Previously, the cheapest car here (at Berger) cost N500,000. Now, with the current 35 per cent increase, the cheapest car you can get goes for N700,000. Formerly, whenever I travelled overseas, I would bring in two or three containers with a minimum of four cars. Now, I can't buy even two containers in six months. The market is no more buoyant; people are no longer buying second-hand vehicles like before; yet Nigerians cannot afford brand new cars. When you don't sell, you can't import more cars.
"The President should stop listening to those trying to enrich themselves. We are all losers with this policy; the only people gaining anything are the few local assembly plants. This policy should be stepped down until the local assembly plants start producing enough; those producing at the moment cannot satisfy the capacity yet. Let the products of the local assembly plants compete with the second cars in the market and if the demand is there, importers will buy from the plants."
Although tariff on used vehicles rose by 70 per cent, local assembly plants were given the incentive of importing fully built unit cars at 35 per cent duty and 20 per cent for commercial vehicles without levy.
Another importer of over 20 years, Mr. Tony Onwumere, lamented the drop in car sales while the cost of importation had doubled.
He said, "At Agha Park, we have about 11 car workers. Prior to this policy, we could sell up to seven cars in a week. Right now, it is a struggle to sell two cars per week. The prices of these vehicles have gone up because of the duty increase and it is no longer affordable to the masses.
"If things continue at this rate, we would not be able to pay our workers. We also have to take into consideration the Nigerian factor; The government will say 70 per cent increase but in reality it may be 100 per cent by the time the customs would have included all manner of charges."
"What I expect from the government is that the market should be thrown open so that there would be competition for all the players. They should let the Nigerian buyers decide which cars they want. Even at that, how many Nigerians would be able to afford the cars being produced by the plants?"
A customs clearing agent, Prince Okorie, also called on the government to give the local car assembly plants time to go into production.
He said, "It is a good policy although it came too soon. The existing local plants should increase their capacity to meet the demand before the government introduces tariff to discourage car importation."
The President of the Berger Car Dealers Association, Mr. Metche Nnadiekwe, said the policy would negatively affect the economy.
He called on the government to postpone the implementation of the new import tariff on vehicles to allow the local assembly plants to go into the production of sufficient units that would meet local demand.
He said, "If they go ahead with that policy, many of us will be thrown out of jobs. The government did not take us into consideration before announcing that policy. The cost of clearance is high now; a car of N2m now costs N3m; the demand is falling.
"If this association can longer pay its workers, it is a problem. More people pushed into the labour market would only find a means of survival. We have been communicating with the Budget Office and National Automotive Council on the hardship this policy would bring. We hope they listen."
The President of the National Council of Managing Directors of Licensed Customs Agents, Mr. Lucky Amiwero, said, "I expect the government to have ensured that Ajaokuta steel was up and running before ever launching this policy; after all, steel is needed for manufacturing cars and other accessories.
"This is a harsh policy for a low income country that has no efficient mass transit system. It will have a ripple effect on the economy. The government should go over the policy again; they should determine what can be imported and cannot be imported. If indeed they want to encourage local car manufacturing, then, some of the car parts like headlamps and windscreens can be made in Nigeria. How many cars can the local industries make to meet demand? All these should be sorted out first.When people cannot afford the tariff, they might resort to smuggling."
Although the Director-General, National Automobile Council, Mr. Aminu Jalal, did not reply the call or text message to his phone, he had in an interview with THE PUNCH on May 23 2014 said that 12 automobile manufacturing firms had so indicated interest in setting up vehicle assembly plants in Nigeria.
He had also confirmed the July 1, 2014 date for the enforcement of a new tariff on imported vehicles.
Jalal said, "Twelve firms have concluded all the preliminary works on the planned assembly plants and are expected to begin the roll-out any moment from now."

Punch 

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Editor's Mail

Love the article on Gaddafi
We must rise above tribalism & divide & rule of the colonialist who stole & looted our treasure & planted their puppets to lord it over us..they alone can decide on whosoever is performing & the one that is corrupt..but the most corrupt nations are the western countries that plunder the resources of other nations & make them poorer & aid the rulers to steal & keep such ill gotten wealth in their country..yemen,syria etc have killed more than gadhafi but its not A̷̷̴ good investment for the west(this is laughable)because oil is not in these countries..when obasanjo annihilated the odi people in rivers state, they looked away because its in their favour & interest..one day! Samosa Iyoha

Hello from
Johannesburg
I was amazed to find a website for Africans in Hungary.
Looks like you have quite a community there. Here in SA we have some three million Zimbabweans living in exile and not much sign of going home ... but in Hungary??? Hope to meet you on one of my trips to Europe; was in Steirmark Austria near the Hungarian border earlier this month. Every good wish for 2011. Geoff in Jo'burg

I'm impressed by
ANH work but...
Interesting interview...
I think from what have been said, the Nigerian embassy here seem to be more concern about its nationals than we are for ourselves. Our complete disregard for the laws of Hungary isn't going to help Nigeria's image or going to promote what the Embassy is trying to showcase. So if the journalists could zoom-in more focus on Nigerians living, working and studying here in Hungary than scrutinizing the embassy and its every move, i think it would be of tremendous help to the embassy serving its nationals better and create more awareness about where we live . Taking the issues of illicit drugs and forged documents as typical examples.. there are so many cases of Nigerians been involved. But i am yet to read of it in e.news. So i think if only you and your journalists could write more about it and follow up on the stories i think it will make our nationals more aware of what to expect. I wouldn't say i am not impressed with your work but you need to be more of a two way street rather than a one way street . Keep up the good work... Sylvia

My comment to the interview with his excellency Mr. Adedotun Adenrele Adepoju CDA a.i--

He is an intelligent man. He spoke well on the issues! Thanks to Mr Hakeem Babalola for the interview it contains some expedient information.. B.Ayo Adams click to read editor's mail
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