Toyota Joins Local Vehicle Assembly Party

As the ‘made in Nigeria’ trend grows daily, Toyota Nigeria has now joined the fray by unveiling its first ‘locally made’ vehicle in the country – a Toyota Hiace bus built at the company’s 30,000 capacity plant in Lagos.

Toyota, the largest car manufacturing company in the world and the largest car seller in Nigeria is coming to the party a little late as other car manufacturers – Nissan, Ford, Kia, Peugeot and others – have already rolled ‘Nigerian’ cars off their vehicle assembly platforms.

While the country celebrates these achievements and economic milestones, a few pertinent questions must be asked chief among them being ‘exactly what is the local component of the made in Nigeria vehicles?’

If it is the case that the car companies are simply importing knocked down parts and coupling same in the country, then in reality, these achievements are not as noteworthy as portrayed.

Worse still, if the import duty receipts on these components are significantly lower than duties charged on fully assembled vehicles, then the country is losing income as a result of the policy encouraging local vehicle assembly.

The offset however is the potential increase in employment occasioned by the assembly plants who are charged with delivering the locally made vehicles to the Nigerian market.

But there are yet more questions: Do the newly created jobs add more to the economy than the loss in import duty receipts? Can the assembly plants slowly encourage import substitution in components which can be locally fabricated – leather or cloth seat coverings, small machined parts, glass windows and panels, rubber or plastic fittings, etc.? It is only if the assembly plants can develop secondary or feeder sectors, will the local assembly of vehicles make economic sense.

Ideally, the government should insist that all car brands looking to establish assembly plants locally and therefore enjoy import duty waivers or subsidies must have clear import substitution and backward integration strategies to encourage local industry. They must also have training programs in place to ensure that local technicians are able to service and maintain their locally assembled vehicles.

As a sign of good faith, it is vital that protectionism of some form is enforced as a matter of policy by the Federal government to ensure that these plants have a ready market among local buyers. A good start will be the insistence by the government that all public servants patronize these assembly plants for the procurement of their official vehicles.

Otherwise, it is likely that these plants may go the way of those before them like Volkswagen and Leyland – assembly plants which thrived until the 1980’s when local demand dried up with the fall in government patronage. [Read more…]



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