21 automakers to set up assembly plants in Nigeria

A total of 21 automobile dealerships in Nigeria have made commitments with some foreign technical partners to set up assembly operations in the country since the announcement of the new automotive policy last year.

This move, industry watchers say, will boost local automobile assembly and discourage influx of grey and parallel imports into the country.

The progress report made available to BusinessDay by the National Automotive Council (NAC) on the implementation of the new policy revealed that 21 companies have so far signed commitments with technical partners to set up assembly operations with product lines as follows: cars and Sport Utility Vehicles (SUVs) 5, pick-up trucks 4, mini-buses 6, buses 4, and trucks 8.

As at the time of filing this report, the current status of implementation indicates that

all of the parties have obtained land or factories for assembly operations.

Also, while all the companies except two have completed their feasibility studies, two of them have started building their factories. There are very strong indications that three will start assembly operations before the end of the year, while six have started already.

According to NAC, the existing assembly plants, such as Peugeot Automobiles of Nigeria (PAN), Innoson Vehicle Manufacturers and VON Nigeria, have new leases of life. While PAN resumed assembly of Peugeot cars last July, VON is assembling Nissan and Hyundai vehicles, and reliable sources say Innoson will start assembling cars this month.

On the other hand, Dana Motors has signed technical partnership agreements with Kia and Renault. The company is converting a warehouse in Isolo, Lagos, to serve as a semi-knocked-down (SKD) assembly plant. Assembly is expected to kick off this month.

Haulage transport businesses will receive a boost under Transit Support Services Limited, with the assembly of road tractors, lorries and dump trucks, trailer bodies and tankers. Transit Support Services, a company owned by ABC Transport, recently signed an agreement with Original Equipment Manufacturers (OEMs).

Another company that has entered into discussions and feasibility studies to convert a former textile industry in Isolo to an SKD assembly plant is the Kewalram Chanrai Group.

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

In terms of local content development and assembly plants, existing manufacturers under the aegis of the Automobile Local Content Manufacturers of Nigeria (ALCMAN) are being supported to serve assemblers.

Whereas capacity for certain low-tech components like seats, windscreens and chemicals already exists, a quality and technical audit of local component manufacturers has commenced. The audit will provide the information needed to coordinate quality control systems to ensure that they meet the standards required by the assembly plants.

It was gathered that NAC will be organising a business-to-business meeting between South African and Japanese automotive component manufacturers in October and November 2014, respectively. Other matchmaking opportunities with component manufacturers in India, Pakistan and Morocco are also being explored.

As more assembly plants move to CKD operations, opportunities for local content incorporation also increase proportionately. Once local capacity is ascertained for the manufacture of components, such components will be removed from the SKD/CKD kits. Jobs to be created will be proportional to the extent of assembly operations and local content incorporation.

BusinessDay