As reported by the latest news on the car industry, the LCCI has urged the President Muhammadu Buhari to cut down tariffs on car imports with the aim of promoting the national economy.
In 2013, The Government officially launched a new automotive policy which raised tariffs on car imports from 22 percent to 70 percent and crashed that of Semi Knocked Down (SKD) and Complete Knocked Down (CKD) in order to both restrict the import of fully built up vehicles and encourage local production of new vehicles.
The Nigeria economy has been suffered a lot of serious damage from a new automobile policy
However, the auto policy has resulted in a drastic reduction in vehicles sales and the high price of imported cars.
The Director-General of the LCCI, Mr. Muda Yusuf said that the automobile policy was passed to the current administration. It increased the car price out of the reach of most corporate organizations, citizens and negatively affected the country’s economy.
The situation for the automotive industry was bad enough. The imported vehicles tariff surged from 22 percent to 70 percent, along with the over 100% depreciation of currency have barred a large number of individuals and corporate organizations from affording 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 added. It is necessary to quickly reverse this offensive situation.
A large number of individuals and corporate organizations cannot afford new cars
Mr. Yusuf told that the nation’s automotive policy which is launched in 2013 was an import replacement strategy with the purpose of decreasing importing cars and increasing domestic auto assembly producers. However, vehicle assemblers also depend on imports like vehicle importers do. That is in contrast to the objective of the import-replacement strategy.
It has been three years since the automobile policy was officially implemented the promised affordable cars have not been seen. By contrast, car prices have reached unprecedented levels in the Nigeria’s history, causing shocks and incalculable consequences to the economy of the country.
The car prices have reached ' unprecedented ' levels in the Nigeria’s history
According to Mr. Muda Yusuf, the policy has had a negative effect on almost every aspect of the social lives and economy. Most the movement of people and goods in Nigeria are done by road, clearly implies the country’s heavy reliance on vehicles such as trucks, commercial buses, and cars.
He remarked that the auto policy had immeasurably depressing effects and consequences on the welfare of citizens and the economy.
He cited new car prices have risen by between 100 to 400 percent as a result of the auto policy, for instance:
- A 1.8l engine new car now costs N18 million
- A 2l engine new car now costs N20 million
- A 3l engine new car costs N30 million
- A 30-seater new bus costs N45 million
- An 18-seater new bus costs N29 million
The policy has had a negative effect on almost every aspect of the social lives and economy
That results in the fact that there are not many citizens and investors are able to afford such shocking prices. For instance, numerous large bodies have to buy second-hand vehicles to use and take drastic cuts on their feet, a lot of hospitals can ill afford to own new ambulances. The implied horrific scenario for operating costs of bodies is worrying and unsuitable for an economy heavily depending upon road transport.
As remarked by Yusuf, the policy has inflicted a lot of serious damage on most investors in the Nigeria’s auto sector. That originates the high price of vehicles which causes the low sales and large corrosion of profit margins.
The customs duties on both used car and commercials vehicles should decrease to 20 percent
In order to reverse that unsavory situation, the Director-General has recommended that the Federal Government should reduce the import duty on new vehicles from 70 percent to 35 percent with the purpose of making the vehicles inexpensive.
Mr. Muda Yusuf also announced in his statement that the customs duties on both used car and commercials vehicles should decrease to 20 percent while imports of both SKD and as CKD should enjoy zero duties.
The LCCI DG said that the Nigeria’s economic situation will improve if his recommendations were endorsed
The LCCI DG said that the Nigeria’s economic situation will improve if his recommendations were endorsed. For example, Nigeria’s maritime industry will be developing. Furthermore, there will be more jobs restored in the auto industry, and vehicle assembly factories will get more benefits thanks to a zero percent tax on both the semi-knocked-down and complete-knocked-down.
Furthermore, the recommendations could make a positive influence on the welfare of citizens, the country’s political capital, and the ability to own vehicles of the middle class and the transportation sector. Besides, vehicle smuggling will be significantly reduced and tax revenue from car imports will considerably get better.