The automotive policy is biting harder on the economy and must be urgently reviewed, the Lagos Chamber of Commerce and Industry ( LCCI ) said on Monday in Lagos.
The Director-General of LCCI, Mr Muda Yusuf, who made the observation in an interview, said that the review was necessary for facilitated economic growth.
Yusuf said that the policy, which raised tariff on imported cars from 20 per cent to 70 per cent, had put the cost of vehicles beyond the reach of many individuals and corporate bodies
“There is the need to act quickly to reverse the unsavory situation,” he said
The automotive policy was introduced in 2013 as a strategy to reduce importation of vehicles and boost the capacity of domestic vehicle assembly plants.
“The automobile sector was hit by the double shock of currency depreciation and a hike in tariff from 20 per cent to 70 per cent (in the case of new cars).
“Whereas, there is very little that can be done about the currency depreciation, a great deal can be done about the policy, which is a creation of government,” Yusuf said.
Yusuf said that years into the implementation of the policy, much progress had yet to been made.
“The affordable vehicles promised at the inception of the policy are yet to be seen. The economy has suffered incalculable consequences and shocks as the cost of vehicles reached levels that are unprecedented in the history of the country.
“Virtually all aspects of our economic and social lives have been adversely affected by the situation because over 90 per cent of the country’s freight and human movement are done by road, which implies heavy dependence on cars, commercial buses and trucks.
“Manufacturers and other real sector investors suffer from sharp increases in haulage cost because of the high cost of trucks; school buses have become unaffordable by many institutions.
“Many hospitals cannot afford new ambulances; many corporate organisations have drastically cut down on their fleet. Car ownership is now completely beyond the majority of the middle class,’’ he said.
He said that the consequences of the policy on the economy and welfare of citizens were immeasurable.
According to him, the cost of vehicles rose by between 100 per cent and 400 per cent due to the policy.
“ A new car of 1.8-litre engine capacity now costs as high as N18 million; two-litre engine capacity costs N20 million and a 3-litre new Japanese car costs as high as N30 million.
“A 30-seater bus costs about N45 million and an 18-seater bus costs N29 million.
“Not many investors and citizens have the capacity to absorb these outrageous prices.
“Even big corporate organisations are now buying used vehicles. This scenario is most inappropriate for an economy that is heavily dependent on road transportation,” he said.
Yusuf added that the policy had caused loss of maritime business and increased smuggling due to high import duty and levy with a huge duty differential compared with those of neighbouring countries.
He said that the policy also caused huge loss of Customs revenue due to reduction in vehicle importation.
The director-general also said that the policy resulted in increased cost of transportation which affected all sectors of the economy.
“Import duty on commercial vehicles and used cars should be reviewed downwards to 20 per cent.
“Complete Knocked Down ( CKD ) and Semi Knocked Down ( SKD ) should all attract zero duty,” the LCCI boss advised.
According to Yusuf, the government should grant further tax concession and waiver to assembly plants and retain incentives for machineries and tyre industries as contained in the policy
Yusuf said that similar incentives should be extended for local production of vehicle spare parts.
He urged the government and its agencies to encourage patronage of locally assembled vehicles to boost growth of the industry.
Yusuf said that review of the policy would restore jobs in the automobile industry and boost activity in maritime sector