Nigeria’s auto industry loses $10bn yearly to petrochemical, steel deficits

Workers assembling a vehicle Government’s failure to revive steel companies and equally develop indigenous petrochemical plants have stalled the local automotive development agenda, leading to loss of $10 billion yearly to large scale importation of fully-built motor vehicles and allied components used for local assembling.

Chairman, Automobile and Allied Group of Lagos Chamber of Commerce and Industry (LCCI), Kunle Jaiyesimi, said auto assemblers are struggling to maximise the potential of their investments in the Semi-Knocked Down (SKD) operations, stating that not a single of the local assemblers could boast of living up to the dictates and specifications of NAIDP in terms of Completely Knocked Down (CKD) operation, despite the increased number of local assemblers.

He said government should also commit the billions it has so far generated on the levy imposed on importation of new fully built vehicles to assist genuine players in the auxiliary and assembling value chain by providing loans at a single-digit interest rate to them for the expansion of their businesses and fast-tracking the growth potentials of the industry.

Similarly, the steel companies that abound locally, if functioning, would have helped the industry in producing automotive components such as frames, brake disc and drums, flywheel engine, crankshaft and water pump pulley, rocker arm bracket, bus door hand parts, and exhaust valve among others.

In the alternative, local manufacturers are heavily dependent on imported spare parts, put at 80 per cent of the entire vehicle components and valued at over $10 billion (about N5 trillion) in capital flight yearly.

However, he said the Federal Government can revive and resuscitate the automobile industry if it is able to urgently review the auto policy and pass it into law to boost investors’ confidence in the automotive space.

Chief Executive Officer, West Atlantic Cold-Chain and Commodities Limited, Henrii Nwanguma, said the challenges present opportunities for private sector investment especially if the risk appetite is there and the auto manufacturers or assemblers are incentivized to source locally by government, resource efficiency and quality.

The Federal Government had introduced the National Automotive Industry Development Plan (NAIDP) in 2013 to revive local assembling and car manufacturing over a period of time.

He said with respect to Ajaokuta and Osogbo Steel rolling, “We have demonstrated our legendary incompetence and lackadaisical attitude or just paying lip service to industrialisation.” To enable commenting and other interactive features, please switch to the more advanced..

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