The Dangote Group under a tripartite agreement involving Dangote Industries Limited, the Kaduna state government, and Peugeot of France PSA Groupe has been granted a franchise by the Peugeot of France Groupe to construct and operate an assembly plant in Nigeria.
The new assembly plant, Dangote-Peugeot Automobile Nigeria Limited DPAN, is coming after Dangote group made an initial N11 billion bid for majority stake in Peugeot Automobile Nigeria (PAN) from the Asset Management Company of Nigeria AMCON, an exercise which has remained unresolved for more than a year.
Dangote group has now gone to invite tenders from members of the public for the construction of a new Peugeot Assembly plant to be located at Dutse, along the Kaduna-Abuja expressway, Kaduna, about 25 kilometers away from the present location of PAN Limited assembly plant in Kakuri industrial zone of Kaduna.
Competitors such as Innoson, Kia, and the Vaswani brothers, may be in for a tough time as Dangote is known for selling goods at the slimmest of margins, in favor of quick turnover and revenue from after-sales services.
His collaboration with the state governments means he will not face opposition from the state governments. Also, patronage from the state governments is also guaranteed since they are shareholders. Prior to its struggles, the government had been one of PAN’s biggest customers.
Recall that in 2016, the Asset Management Corporation of Nigeria (AMCON) invited prospective investors to bid for its 79.3 percent stake in Peugeot Automobile Nigeria.
AMCON acquired a majority stake in PAN in 2012 after taking over the company’s debts worth about N30 billion owed to some Nigerian banks.
Peugeot Automobile Company of Nigeria 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.
After about two decades of smooth operations, the company ran into stormy waters after series of policy somersaults by the government and inadequate tariff protection for local assembly plants.
By 2013, the company’s revenue generation profile had dropped to a meager N2 billion per annum from about N30 billion a decade ago. Its market share dropped drastically from 20% to only 2%, with car sales figure declining from N31.7 billion in 2007 to N1.96 billion.
With a huge debt of N30 billion by 2011 and no prospect of a private investor willing to risk his money in turning it around, in 2012, the Asset Management Company of Nigeria (AMCON), acquired a controlling 80% shareholding and assumed board and management control.