By Cliffsimeon Akalonu The Lagos Chamber of Commerce and Industry has called for an immediate review of the nation’s automotive policy, urging the federal government to slash the import duty of 70 per cent on new vehicles to 35 per cent in order to make vehicles affordable. In a statement issued weekend on the state of the auto industry, the Director-General of LCCI, Mr. Muda Yusuf, demanded that the import duty on commercial vehicles and used cars be reviewed downwards to 20 per cent while importation of complete knocked-down and semi knocked-down components should attract zero duty. As part of a new auto policy in 2013 meant to support local production of new vehicles and discourage importation of fully built automobiles, the Federal Government had raised the import duty on cars from 22 per cent to 70 per cent and crashed that of the SKD/CKD components. But the economic recession and subsequent crash in the exchange rate of the naira have led to high cost of imported vehicles and a drastic drop in automobile sales in the country in the last three years. “There is need to act quickly to reverse the unsavoury situation. The automobile sector was hit by the double shock of over 100 per cent currency depreciation and a hike in tariff from 22 per cent to 70 per cent [in the case of new cars]. Whereas there is very little that can be done about the currency depreciation, a great deal can be done about the auto policy, which is a creation of the government,” he said. “But the vehicle assemblers are as dependent on imports as the importers of vehicles. This is not in consonance with the objective of import substitution strategy, which thrives better in the context of high domestic value addition. It is in this setting that the economy could benefit from the inherent values of import substitution, which includes backward integration, multiplier effects, conservation of foreign exchange, job creation and reduction of import bills. “But three years into the implementation of the auto policy, not much progress has been made. The affordable vehicles promised at the inception of the policy are yet to be seen. If anything, the economy had suffered incalculable consequences and shocks as the cost of vehicles has reached levels that were unprecedented in the history of the country”, he added. According to him, virtually all aspects of the economic and social lives have been adversely impacted by the situation, as over 90 per cent of the country’s freight and human movements are done by road, which implies heavy dependence on cars, commercial buses and trucks. Yusuf described the unintended consequences and collateral effects on the economy and welfare of citizens as immeasurable. “We have witnessed an increase in the price of vehicles by between 100 to 400 per cent. A new car of 1.8 litre engine capacity now costs as high as N18 million; a new car of two litre engine capacity now costs as high as N20 million; a three-litre new Japanese car costs as high as N30 million; a 30-seater bus costs about N45 million; and an 18-seater bus costs N29 million. “Not many investors and citizens have the capacity to absorb these outrageous prices. Even high-end corporate organisations are now buying used vehicles for their organisations. The implication of the scenario for operational costs of organisations is worrisome. This scenario is most inappropriate for an economy that is heavily dependent on road transportation.”]]>
