Growth spurt in automotive industry as capacity rises by 50%

The result of the latest survey carried out by the Manufacturers Association of Nigeria (MAN) shows that capacity utilisation in the motor vehicle and miscellaneous assembly industry rose to 50.3 percent in the first half of 2014.

This is a significant improvement from 37.1 percent capacity recorded in the corresponding period of 2013 and 42.7 percent reported in the second half of the same year.

It likewise signifies that the automotive policy, introduced in late 2013 by the Federal Government is consistently gaining traction.

“Activities (in this sector) have been boosted recently by the major assembly plants, particularly the tricycle assemblers,” says MAN, in the report.

“In this group is also the oil and lubricant group that is also putting up some level of appreciable performances,” adds MAN.

The motor vehicle and miscellaneous assembly sub-sector includes motor vehicle assemblers, boat/ship builders, automobile components manufacturers, electric generators assemblers, as well as miscellaneous machine and equipment producers. Other members of the group are bicycle makers, motorcycle assemblers and horologicals (wrist watch and wall clock makers).

The growth of the tricycle segment of the auto industry can be attributed to demography, poor transport system in the cities, increased traffic jams and unemployment.

Many in Nigeria’s 24 percent unemployment statistic have found solaces in tri-cycles which have become their sources of livelihood.

“Due to obvious shortcomings in the transport system in the country, tricycle invention has been a good business. Many city dwellers want to get over traffic gridlocks as soon as possible. Tricycles have come to solve this problem,” said Matthew Ibeabuchi, CEO, MD Services Limited.

Tri-cycle assemblers in the country include Innoson Vehicle Manufacturing Company Limited, Eagle Motors and Padson Industries.

Similarly, lubrication oil makers include Conoil plc, Kixx Motor Oil and Forte Oil, among others.

The motor vehicle assembly segment has been the key driver of this sub-sector, having attracted 21 companies that signed commitments with technical partners to set up assembly operations with product lines in 2014.

Peugeot Automobiles of Nigeria (PAN) and VON Nigeria had new leases of life in 2014 while PAN also resumed assembly of Peugeot cars.  Similarly, VON started assembly of Nissan and Hyundai vehicles.

Also, Dana Motors signed technical partnership agreements with Kia and Renault for a semi-knocked-down (SKD) assembly plant, while Kewalram Chanrai Group  began discussions and feasibility studies to convert a former textile industry in Isolo to an SKD assembly plant.

Coscharis Motors acquired several acres of land at Lekki, Lagos, for the building of Joylong brand of cars and mini-buses, with feasibility studies ongoing.

Innoson has unveiled IVM Fox hatchback and IVM Umu, which are the first ever truly made-in-Nigeria cars. This has placed Nigeria in the league of global car manufacturers, as the vehicles are made up of about 70 per cent locally sourced contents, according to the local content analysis done by the Nigerian Society of Engineers (NSE). This, however, will only reflect on capacity in 2015.

“We spend about $6 billion annually importing cars. However since the introduction of the auto policy, we have experienced a 20 per cent drop in imported cars and have exceeded expectations in a very short period,” said Olusegun Aganga, minister of industry, trade and investment, during the commissioning of Innoson’s new vehicles in Nnewi, Anambra State.

ODINAKA ANUDU & JOSEPHINE OKOJIE