Fear of closure as FG begins inspection of 54 car assembly plants

Action amounts to harassment — Stakeholders There are mixed feelings in the automotive sector over the impending inspection of the automobile manufacturing and assembly plants by the Nigeria Customs Service (NCS), Daily Trust can report. There are fears that the majority of the assembly plants may be delisted over suspicion that “they are not doing […]

• Action amounts to harassment — Stakeholders

There are mixed feelings in the automotive sector over the impending inspection of the automobile manufacturing and assembly plants by the Nigeria Customs Service (NCS), Daily Trust can report.

There are fears that the majority of the assembly plants may be delisted over suspicion that “they are not doing what they claim to be doing.”

Our correspondent reports that the inspection exercise of the automobile manufacturing and assembly plants currently operating in Nigeria was to have started on Monday.

A mail dated August 18, 2021, signed by the director general of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, said licensed auto industry assemblers were advised to get ready to receive the NCS inspection team and to avoid being delisted and stripped of their bonafide assemblers status.

“Member companies in this sub-sector are requested to update their records with the branch where they are located. This is to enable MAN to collate the authentic list of bonafide assemblers currently in operation and forward same to the NCS for use on the inspection exercise and to enable MAN to follow up on the exercise in the interest of our members.”

The move is generating mixed feelings in the sector. While some assemblers see it as a positive development as it would “separate the chaff from the wheat”, others are apprehensive that they could be found wanting during the inspection.

Daily Trust reports that there are no fewer than 54 assembly plants licensed by the federal government under the 10-year Nigeria Automotive Industry Development Plan (NAIDP) launched in 2014 with an installed capacity of over 500,000 units of vehicles per annum.

However, since the launch, it was gathered that very few are functional and operational, fueling fears that some of the assemblers only got the license without churning out any vehicle.

An operator who spoke with our correspondent on condition of anonymity said, “Claiming that most of the assembly plants are not doing what they ought to be doing is simply an idle logic borne out of disdain for the automotive policy.”

But the deputy managing director at CFAO Motors, Mr. Kunle Jaiyesinmi, expressed support for the government’s move, saying it was imperative to verify the genuine assemblers in order to “separate the pretenders from the real contenders.”

He said CFAO Motors, which is a major assembler, is aware of the planned inspection and it is ready for the team.

He said: “54 or 56 licenses were issued to auto manufacturers. A lot of people applied and got the license and within the last 7, 8 years, they have not really made any input.

“It is a step in the right direction. They should not just sit in Abuja and give assemblers licenses. We are ready for them any time.”

Also, Coscharis Motors Limited, another major operator in the vehicle assembly segment rolling out Ford Rangers, Renault brands, among others, said it is aware of the planned inspection.

The general manager, Marketing and Corporate Communications of Coscharis, Mr. Abiona Babarinde said, “We are very much aware. The memo was shared. MAN has also sent to us. Of course it is to show the authenticity of the real players that are really doing the assembly.

“That exercise is to showcase the authenticity. We are good to go. We are happy to welcome any government regulator. We even have SON certification for our plant.”

He however said the planned inspection should ginger the government to address the infrastructural challenges confronting the assemblers.

“If the government is sincere in supporting local manufacturers, they would go back with a report after the inspection.

“We want more encouragement, more support. Let the enabling environment be there, let the infrastructural facilities be there, don’t let us run the plants on generators,” he said.

Also speaking with our correspondent, Chairman of Transit Support Service (TSS), Mr. Frank Nneji, said only the ‘pretenders’ would entertain fear over the planned inspection.

“That’s not a problem. It is a problem for the pretenders. But I don’t know why it would become a special assignment, they have been doing that before,” he said.

For Mr. Mamudu Luqman, an auto industry stakeholder, “The action is totally uncalled for and amounts to harassment. This is a disincentive to investment in addition to the provision of Section 38 of the Finance Act 2020.

“This act already puts import duty on SKD and FBU on commercial vehicles at 10%. Incentive levy for car assembly has been slashed to 5%. I will suggest that customs increase its vigilance on imported SKD or CKD to ensure that the kits are as defined by NAIDP. They should allow SON and the OEMs (original equipment manufacturers) to worry about the integrity of vehicles assembled locally,” he added.

When contacted, the customs PRO, Mr. Joseph Attah, said he was not aware of the planned inspection.