Import duties frustrate car imports, fuels smuggling – NPA

Duties on car imports aimed at boosting local production have
reduced the number of vehicles brought into the country this year
by a quarter, fuelling smuggling from neighbouring Benin, the
Nigerian Ports Authority has said.

Car imports fell to 70,453 units in the first 10 months of this
year, a 26.8 per cent reduction on the same period of 2016, Reuters
said, quoting the NPA figures.

The government imposed a 70 per cent tariff on imported vehicles
in December 2015 as part of attempts by the Federal Government to
stimulate local production.

Before that, the tariff was 22 per cent. The Managing Director,
NPA, Hadiza Usman, said the policy meant local demand for cars was
not being met.

“We appreciate the need for the government to have assembly
plants and manufacturing firms in Nigeria but we are concerned that
the capacity of the Nigerian market is beyond what is said to be
assembled in Nigeria,” the NPA boss explained.

“We have seen a lot of cars being smuggled through neighbouring
countries – mainly from Benin,” she added. Benin maintains low
import tariffs compared to Nigeria, which for years has been beset
by chronic congestion in its ports.

Vehicle imports fell to 96,222 units last year from 131,994 in
2015, according to port figures.

Usman said the ports authority expected a further drop in 2018
to 67,400 units.

The tariffs imposed in 2015 attracted United States car maker,
Ford , South Korea’s Kia Motors and Germany’s Volkswagen, which
announced plans the same year to set up assembly plants in
Nigeria.

But activity slowed soon afterwards as the economy slid into
recession in 2016 due to low oil prices and a currency crisis.

Although Nigeria emerged from recession in the second quarter of
this year, growth is fragile and limited financing for new cars has
stunted sales.

Ford’s local partner said it assembled 739 units of its Ranger
pickup in 2016 and this year. Its plant in Nigeria’s commercial
capital, Lagos, can assemble 5,000 cars annually.

Kia Motors, which has a plant in Lagos with a 20,000 vehicle
capacity, said it assembled 1,800 units this year but did not give
figures for 2016.

And a representative of Stallion Motors, Volkswagen’s local
vehicle assembly partner, said work stopped around August due to
issues relating to the exchange rate and production costs.

He said up to 30 vehicles were being rolled out monthly,
although assembly did not happen on a regular basis.

Duties on car imports aimed at boosting local production have
reduced the number of vehicles brought into the country this year
by a quarter, fuelling smuggling from neighbouring Benin, the
Nigerian Ports Authority has said.

Car imports fell to 70,453 units in the first 10 months of this
year, a 26.8 per cent reduction on the same period of 2016, Reuters
said, quoting the NPA figures.

The government imposed a 70 per cent tariff on imported vehicles
in December 2015 as part of attempts by the Federal Government to
stimulate local production.

Before that, the tariff was 22 per cent. The Managing Director,
NPA, Hadiza Usman, said the policy meant local demand for cars was
not being met.

“We appreciate the need for the government to have assembly
plants and manufacturing firms in Nigeria but we are concerned that
the capacity of the Nigerian market is beyond what is said to be
assembled in Nigeria,” the NPA boss explained.

“We have seen a lot of cars being smuggled through neighbouring
countries – mainly from Benin,” she added. Benin maintains low
import tariffs compared to Nigeria, which for years has been beset
by chronic congestion in its ports.

Vehicle imports fell to 96,222 units last year from 131,994 in
2015, according to port figures.

Usman said the ports authority expected a further drop in 2018
to 67,400 units.

The tariffs imposed in 2015 attracted United States car maker,
Ford , South Korea’s Kia Motors and Germany’s Volkswagen, which
announced plans the same year to set up assembly plants in
Nigeria.

But activity slowed soon afterwards as the economy slid into
recession in 2016 due to low oil prices and a currency crisis.

Although Nigeria emerged from recession in the second quarter of
this year, growth is fragile and limited financing for new cars has
stunted sales.

Ford’s local partner said it assembled 739 units of its Ranger
pickup in 2016 and this year. Its plant in Nigeria’s commercial
capital, Lagos, can assemble 5,000 cars annually.

Kia Motors, which has a plant in Lagos with a 20,000 vehicle
capacity, said it assembled 1,800 units this year but did not give
figures for 2016.

And a representative of Stallion Motors, Volkswagen’s local
vehicle assembly partner, said work stopped around August due to
issues relating to the exchange rate and production costs.

He said up to 30 vehicles were being rolled out monthly,
although assembly did not happen on a regular basis.