Two years after, NADDC fails to provide Nigerians vehicle financing  scheme, as prices of new cars soar

For over two years, the National Automotive Design and Development Council (NADDC) has failed to fulfil the promise to provide Nigerians with a Vehicle Financing Scheme (VFS) that would enable citizens to purchase brand new cars.

VFS which promised 6 per cent to 8 per cent interest rate is also supposed to give long duration repayment plans.

When in effect, the VFS will create room for average income earners in the country to be able to purchase a new vehicle and pay over the years. 

This would also encourage local market patronage, as the VFS is set out primarily for the purchase of vehicles assembled in Nigeria.

The VFS which would be giving funds to citizens for the purchase of new vehicles assembled in the country is barred from giving funds for the purchase vehicles assembled outside the country.

This is part of the initiatives of the National Automotive industry Plan (NAIP) which sought the promotion of local content as a means of enabling the local market to grow.

A source at the NADDC told Tribune Online that the VFS may not commence this year (2020).

“You see, nothing is happening here at the moment. Since the outbreak of COVID-19, nothing has been happening here.”

Meanwhile, the absence of a scheme which would provide loans for people for them to buy new cars has rendered over 90 per cent of the population impotent when it comes to buying new cars.

An automotive expert at Stallion Group told Tribune Online that the problem with the automotive industry was high cost of new vehicles.

He blamed the situation on the unavailability of local content. “Even nuts, we import. It is important that we produce spare parts here in order to beat the price of new cars down. Currently, the rise in the dollar is another factor fueling high price on these vehicles.

“New vehicles are really expensive in Nigeria. Hyundai 1.2 litres which one of the lowest cars assembled in here is sold for N7.2 million, Honda City 1.5 litres in a similar category is sold for 9.4 million, while Changan CS 35 1.6 litres is sold for N8.5 million.

“How many people in Nigeria will afford to buy these cars at this rate? These are the lowest cars of each company, but see the prices! If you are talking of modern cars, then you should know that the prices are really high” he stated.

Other experts in the industry had accused the Federal Government of sabotaging the Automotive Policy by not patronising the pioneer assemblers.

Also speaking to Tribune Online, lead sales manager of Honda Automobile Western Africa, Remi Adams revealed that government was to be at the forefront in patronising the vehicles that they gave permission to be assembled in Nigeria as a way of encouraging the local manufacturers and also being an example to Nigerians.

The manager noted that the government was not doing enough to boost the market sales of the few companies that were already on ground assembling in the country. 

“What is the government doing to boost the market now? Check all the government fleets (vehicles), 90 per cent of their vehicles are Toyota. Toyota does not assemble in Nigeria. Since the inception of the policy, Toyota has not sold one vehicle assembled in Nigeria, yet almost all government vehicles are Toyota.

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“One of the conditions in the Automotive Policy is that all government vehicles will be bought from the assemblers in Nigeria. 

“Why did they say that? Because it will promote the purchase of made in Nigeria vehicles and this is the reason why other companies accepted to come and invest. 

“Now that they are here, the government is still buying vehicles that are not assembled in Nigeria.”

He explained further that the “Auto policy is the responsibility of government itself. 

“In actual sense, it is the Federal Government that is not serious with the policy. The power to purchase new vehicle lies with the government,” he stated.

The policy which was initiated in 2014 was targeted at spurring the level of manufactured vehicles in Nigeria with special incentives like waiver on importation of knock-down vehicle parts for assemblers and other support from the government for pioneer companies that had the permission to assemble vehicles in the country and a financial scheme to provide funds to enable Nigerians to purchase new and made in Nigeria vehicles.

Adams explained that other factors hindering the production of vehicles in Nigeria were lack of local content, non-availability of power and a vehicle hire purchase scheme that would enable average income earners to buy these vehicles thereby extending production. 

According to him, “There is no local content in the course of assembling vehicles in Nigeria apart from labour.”

Explaining this he said, “Honda doesn’t produce the entire parts for all the vehicle: the glasses, the seats, the airbag and the brake pads are supplied by the company that produces component parts. Now the NAIP is a 10 year from 2014 to 2024 and the condition for the assembler is different for that of the government. 

“On the part of the government, the period to work with pioneer companies is until we get to 2024. And all of the things that governments said they will do, they are yet to do one. Government is supposed to provide the platform which vehicles assembled in the country will be sold and subsequently increase their sales, which will, in turn, encourage local content,” he stated.

The Federal Government had promised to unveil a vehicle financing scheme two years ago that would afford Nigerians the opportunity to purchase vehicles with only 10 per cent of the market total price of the vehicle, and a window of many years to pay the balance at an interest rate of 6-8 per cent. The scheme is yet to take off since 2018.

The Director-General of NADDC, Jelani Aliyu in April 2019 acknowledged that the Automotive Bill waiting for the assent of the President would untie the bottlenecks hindering the smooth implementation of the policy in the country.

Aliyu had explained that “In other nations when you want to buy a vehicle, you go, you put down 10 per cent to 15 per cent, you drive off with the vehicle and you pay for it for a number of years at just 6 per cent interest rate, but that is non-existent in Nigeria.”

He faulted the existing financing scheme in the country, stating that, “When you have vehicle financing system with an interest rate of about 20 per cent, it is high,” adding that the Council had concluded plan with three indigenous banks to enable access to vehicle financing at a low-interest rate.

“We have funding, we are going to be working with three banks, and we will soon be rolling out what we call the Automotive Vehicle Finance Scheme.”

Jelani, however, said access to the finance will only be provided for vehicles that are manufactured in Nigeria.

“In about a month and a half, we will roll out the vehicle finance scheme so that Nigerians will be able to put in maybe 10 per cent or less and drive off with the vehicle and pay over a couple of years at just 6-8 per cent interest rate,” he stated.

Efforts made by Tribune Online through messages and calls to the DG of NADDC proved abortive at of the time of filing this report.


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