‘Don’t Reduce Import Duty On Used Cars’

The Vice-President, Business Development, Dana Motors, Mr Olu Tikolo has warned against reduction of import duties on used cars, saying it portends danger to the 2013 Nigeria Auto Policy.
Tikolo gave the warning at a media parley with the media in its office, on the partnership between Cars45 and Dana Motors.
Tikolo’s warning was coming on the heels of the recent call made by some stakeholders demanding for a reduction on the tariff for imported vehicle by 15 per cent.
According to him, such reduction could derail the existing auto policy.
“We must understand the prospect of the 2013 Auto Policy by the previous government which is aimed at encouraging local manufacturing of cars in Nigeria.
“The call for the reduction in the tariff for importation of used cars portends a great danger to the economy and also for investors’ confidence in our economy.
“Only the manufacturing sector can contribute effectively to the Gross Domestic Product (GDP) of the country which cars assembly and manufacturing can contribute up to 7 per cent.
“In other advanced countries, car manufacturing contributes up to 12 per cent of their economy, examples are South Africa and Brazil,’’ he said.
Tikolo said that the influx of used cars engendered by reduction in tariff would only make Nigeria a dump site, adding that manufacturing sector would grow lean while there would be job loses.
“We don’t need to encourage dumping of all manners of used cars in the country through reduction in the tariff; the first consequence is that there will be job losses.
“We cannot say because of the short term benefit of the reduction neglect the long term effect it will have on the economy, we cannot continue to be import dependent.
“The auto policy will engender employment and create employment and also, the auto policy put in place is to attract investors to the auto sector.
“If we allow this to happen, then, it is a policy summersault which will not in any way portend a good omen to Nigeria’s economy,’’ he said.
Tikolo said that instead of reducing the tariff, government should find a way of encouraging the local manufacturers through incentives and foreign exchange intervention.
“We need to ask ourselves the reason locally made cars are expensive. The reason is simple, the foreign exchange which is high. Cars made in the country have about 3,000 component parts.
“None of the component parts for the car manufacturing are produced in Nigeria; and all these components are subjected to import duties, this explains the reason.
“Also if we can have some of the raw materials produced in Nigeria, the cost of production will be greatly reduced. The Ajaokuta steel is one of them and many others.
“Local manufacturing should be encouraged in a way to industrialise the country and not discouraging many that have put their capital on the line with policy summersault,’’ he said.