National Automotive Policy: Companies import FBV’s as CKD’s

 …FG lose billions in revenue

THE national automotive policy otherwise known as the new Auto Industry Development Plan put in place by the past administration of Goodluck Jonathan to develop local production of vehicles in 2013 is said to have been hijacked by some key players in the industry.
A source within the industry told National Daily that most of the so-called local vehicle manufacturers and assemblers are not implementing the NAIDP, instead they have cloaked their activities under the immunity provided by the federal government for companies that are effectively implementing the policy and they are reaping the country off in the process.
The highly placed source who craved anonymity disclosed that these key players simply travel abroad to purchase fully built cars, paying an extra cost to partially dismember these cars and then shipping them into Nigeria as knocked down components of the cars for assembly in-country, simply to qualify for the zero tariff given by government to companies actually assembling cars locally.
“The government is losing billions of naira for nothing. If you think these people are actually assembling cars in Nigeria, you are just kidding yourself. Do you know what it takes to set up an actual assembly plant? Do you not see that Toyota politely declined the request for it to be part of the scam?
“What do you think they are doing? Try to enter their so-called assembly plants, you will see that they will not allow you because what they are doing is go abroad buy fully built cars, take off the side mirrors, the bumper, head and rear lights and so on. Ship these materials into the country, avoid paying any tariffs, and then couple these removed parts at their so-called assembly plants, sell to Nigerians and smile to the bank.
“Even their international partners have refused to sell completely knocked down (CKD) parts to them because of fear that they will mess up the standards of their cars and tarnish the image of their brands. Ask them who is selling CKD to them and you will see that they are just fleecing the country of tariff revenue that should have accrued to government coffers and putting the money in their pockets,” another source told National Daily.
Responding to question whether this is not just a phase in the process of getting these companies to eventually begin to assemble actual CKDs in Nigeria, they said it was nothing but another way of depleting the country’s badly-needed revenue for individual benefit.
They also associated the scam with the reason why so many companies and groups applied for licences to become auto manufacturers in the country, so much so that the government at some point had to stop accepting applications.
“You think it is an easy business to break even. Why was everybody applying to become car manufacturers? It was simply because there was some easy amount to be made.”
They claimed that to run a vehicle assembly plant profitably, there was a given number of cars that must be produced and sold annually and stressed that with the various several companies claiming to be assembling cars locally, there was no way each of them could achieve that threshold production and remain sustainable, while saying that if only one company actually sets up an proper auto assembly plant in Nigeria, it will gulp billions of dollars and employ thousands of people, something they said has certainly not happened with all those claiming to be local auto manufacturers.