By MOSES AKAIGWEPrice tags on cars and buses are likely to go up by about 250 per cent next year, following the introduction of new fiscal measure by the Federal Government, as part of the new development plan for the country’s ailing auto industry.
A memo by the Coordinating Minister for the Economy/Finance Minister, Dr. Ngozi Okonjo-Iweala, on Thursday last week, to the Comptroller-General of Nigeria Customs, directed that imported fully built unit (FBU) cars shall now attract 35 per cent duty and 35 per cent levy, totaling 70 per cent charges.
According to the document, the duty on buses has also been raised from 10 per cent to 35 per cent without levy. Hitherto, imported cars attracted about 20 per cent duty.
The minister’s directive dated November 14, and also sent to Federal Inland Revenue Service,pre-shipment agents (Cotechna Inspection Limited and SGS Nigeria Limited) and another agency, Global Scan Limited, said approval for the introduction of the new fiscal measures was given “by Mr. President.”
On the other hand, as part of the policy, local auto manufacturers, like Innoson Vehicle Manufacturing Ltd, Nnewi; VON Automobile (formerly Volkswagen), Ojo; National Trucks Manufacturers, Kano; PAN Nigeria, Kaduna and other auto makers in the country, will no more pay duties or levies on their Completely Knocked Down (CKD) sets imported from their overseas partners.
However, Semi-Knocked Down components for the production of vehicles locally, shall attract only five per cent duty without levy.
The circular, which was obtained exclusively by Daily Sun, explained that the new measures, coming about six weeks after the Federal Executive Council approved a far-reaching automotive industry development plan, were designed to boost activities in the industry and also attract foreign investments.
“The above measures are to create an environment to support existing assembly plants and attract other Original Equipment Manufacturers who have expressed interest in Nigeria”, the minister remarked.
However, while the automotive policy and fiscal measures are being lauded by the National Automotive Council, NAMA (the umbrella body of local auto makers, and the auto manufacturers themselves, importers of fully built vehicles, have been crying foul.
Reacting to the new tariff regime, NAMA Executive Director, Mr. Arthur Madueke, described it and the development policy, which as the best thing to happen to the industry in many years.
Madueke, who has been in the forefront of the manufacturers’ campaign for more stringent duties on imported vehicles as is done in other countries, said: “It has been long over due. Nigeria cannot continue to be a dumping ground for other countries’ auto manufacturers. Nigeria has all it takes to be a leading producer of vehicles. I, therefore, commend President Jonathan for the courage to approve the bold steps, and ignore protests by unpatriotic people who do not want the best for our industry.”
He listed some of the immediate and direct benefits as employment for no fewer than 100, 000 Nigerians, and stimulation of investments in the linkage industries, adding that with full implementation and consistency, the industry is capable of achieving 400, 000 jobs in the next few years.
In their comments, both the Chairman of Innoson Group, Chief Innocent Chukwuma and the Managing Director of Proforce Limited a vehicle armouring plant based in Ode-Remo, Ogun State), Mr. Ade Ogundeyin, hailed “this latest auto industry-friendly pronouncement by government”.
Speaking to the Daily Sun yesterday, the President of the National Association of Government Approved Freight Forwarders (NAGAFF), Chief Eugene Nweke, predicted that the measures would reduce the volume of jobs handled by his members as less cars are likely to be imported from 2014.
According to Nweke, high levy and duty on new cars, would further push patronage towards imported second-hand (tokunbo) cars.
In his reaction, a very influential car importer said the new fiscal measures and the auto development plan are outrageous, citing a provision in the minister’s circular which allows an auto plant to import cars and buses and pay the applicable duties without levy, as a guise to give undue advantage to a particular manufacturer that imports vehicles and also owns a plant.
“It is either you are an importer or you are a manufacturer”, the importer said. “The Trade and Industry Minister said there is no going back on the new measures, even as flawed as they are. He has vowed that he would defend them with every drop of blood in him. On our part, we the vehicle importers will fight the policies with the last drop of blood in us”.
Some car importers, including Elizade Nigeria Limited, Globe Motors, Coscharis Nigeria Limited, CFAO Motors, SCOA and Toyota Nigeria Limited, under the aegis of Auto Manufacturers’ Representatives Group in Nigeria, had in a recent petition to President Goodluck Jonathan, called for the reversal of the new policy.
Meanwhile, there were indications yesterday that auto showrooms might start any moment from now to effect a gradual upward review in their vehicles’ prices in response to the minister’s memo, which they got wind of over the weekend.
At a Kia showroom in Lagos, a source disclosed that meetings were being held and prices of other brands’ vehicles being monitored, “to know when and by what margin to increase our own prices.” The source also feared that that the price of the base model of a Rio was likely to rise by more than N3 million, from the present N2 million by next year.
At a Toyota showroom, also in Lagos, a source hinted of “a sharp price increase” on the cars. “For example, paying 20 per cent duty, our Camry is about N9 million now. But I can assure you that when we reflect the new 70 per cent duty and levy, which represent about 250 per cent increase, Camry will be about N20 million.