BENEFITS OF NEW NATIONAL
AUTOMOTIVE POLICY ON
COMPONENT MANUFACTURING
IN NIGERIA
PRESENTED BY THE DIRECTOR GENERAL, NATIONAL AUTOMOTIVE COUNCIL (NAC)
ENGR. AMINU JALAL, FNSE, FNIM, FNIMechE.
AT THE CAAD/NAC SENSITIZATION WORKSHOP TAGGED “OEM REQUIREMENT FOR AUTOMOTIVE LOCAL
COMPONENTS MANUFACTURING”
KINGS PALACE HOTEL, NNEWI, ANAMBRA STATE..
27TH & 28TH AUGUST, 2014.
IMPORTANCE OF AUTOMOTIVE INDUSTRY
In many countries, the automotive industry plays a very important
role strategically in economic development with respect to the
following:
 Small,
Medium and Micro-Enterprises (SME) development.
 GDP Contribution – In S/Africa, responsible for 7% of GDP & 12% of
exports.
 Economic Linkages.
 Skills development.
 Technology and innovation.
An automotive industry will create significant good quality
employment & a wide range of technological advanced
manufacturing, bearing the foundation that leads to industrial
development in general and in particular, the manufacture of
agricultural , mining and railway equipment, and military hardware
etc.
BENEFITS TO THE NIGERIAN ECONOMY

Major vehicle manufacturers concentrate on assembly and
produce only about 30% of the over 2,000 parts in a car,
while outsourcing the rest to component suppliers. A job in a
typical assembly plant generates three others in the
component supply and seven others in the raw materials
supply industry, thereby creating many SMEs as well as direct
& indirect jobs.

Nigeria is well positioned to be a major assembly hub for
international auto companies due to our existing installed
auto capacity, larger labor force, significant local demand, &
strategic geographic location for export.
Benefits to the Nigerian Economy contd.

Data has shown that:
I.
A total of over 400,000 vehicles valued at over N550 Billion
(US$3.451 billion) were imported in 2012.
II.
Potential value added if importers were locally assembled
today will be N100 billion.
III.
At full capacity, the Nigerian automotive industry has the
potential to create 70,000 skilled and semi-skilled jobs alone
with 210,000 indirect jobs in the SMEs that will supply the
assembly plants. 490,000 other jobs would also be created in
the raw materials supply industries.
IV.
The manufacture of vehicles would enable us acquire the
technologies of mass production, quality control, lean
manufacturing , and engineering which we can use to develop
other sectors of the economy and industrialize
ELEMENTS OF THE AUTOMOTIVE
DEVELOPMENT PLAN

The auto industry is a key component of the Nigerian
Industrial Revolution Plan (NIRP). The NIRP is a 5 year
programme developed by the Federal Ministry of Industry,
trade & investments to diversify Nigeria’s economy and
revenues through industrialization.

The response to the policy has exceeded our expectations.
21 companies have expressed interest in investing in vehicle
assembly. Nissan, Hyundai and Peugeot have already started
assembling vehicles while VW, Honda, Kia, Renault and
Toyota will are conducting feasibility studies. The elements
of the plan are as itemized below
-
Industrial infrastructure: Automotive supplier parks and clusters.
-
Skills development –
1.
Partner with OEMs & their global suppliers.
2.
The industrial Training Fund (ITF).
3.
Development of new curriculum for mechanics’ training and a new syllabus for teaching B.Eng
in Auto Engineering
-
Standards - ISO and SON
-
Investment Promotion:
1.
Fiscal measures
2.
Checking smuggling
3.
Policy Consistency by Government through legislation.
-
Market development
a.
Affordable vehicles
b.
Vehicle purchase scheme
c.
Patronage
LOCAL CONTENT DEVELOPMENT

The Auto development plan will facilitate steady increase in the local
content of vehicles assembled in Nigeria, specifically in the following
vehicle parts:
 Welded
parts (exhaust system, seat frames)
 Electric
parts (batteries, trafficators, wiring harnesses)
 Plastic
and Rubber parts (tyres, tubes, fan blades, seat foam, oil seals, hoses,
radiators gills, etc.)
 Radiators,
Cables, Filters, Brake pads/linings, Windscreens, Side Glasses,
Fiber-glass parts, paints etc.
 Rubber
products (tyres)

An automotive industry with sufficient sales (at east 5,000 units per
model)

Availability of raw materials locally. These are Iron and Steel,
Plastics, Elastomers, Aluminum and other non-ferrous metals.

Availability of other engineering infrastructure like forge and
foundry shops, precision machine shops, heat treatment facilities.

Test centers to test the quality of automotive safety parts,
undertake vehicle homologation and assist R & D.

The development of local content development programme with the
industry and providing appropriate incentives

Charging import duty of 35% on automotive components that are
locally produced at competitive process and of good quality
RESPONSE TO THE AUTO POLICY

NISSAN and Hyundai are assembling vehicles at VON Nigeria ltd.

Peugeot resumed assembling vehicles at PAN.

Dana Motors signed agreements to assemble Kia and Renault
vehicles

VW are conducting a feasibility study on assembling vehicles in
Nigeria.

Innoson Vehicle Manufacturing is expanding to include car
assembly.

Toyota Motor Corporation (TMC) of Japan plans to start with the SKD
assembly Hiace buses;

Kewalram Chanrai Group has initiated discussions with GM and
Mitsubishi to assemble light com vehicles.
Response to the Policy

SCOA Nigeria Plc has commenced the redesign of its expansive assembly
facilities in Isolo, Lagos to Assemble SKD 1 kits of MAN Diesel trucks and
HAMM agricultural tractors.

Leventis Motors has signed an agreement with FOTON-Daimler to
produce Buses and trucks in Nigeria;

Other Nigerian companies that signed assembly agreements with OEMs
include:

Choscharis Motors Ltd.

Globe Motors Ltd.

Lanre Shittu Motors Ltd.

Transit Support Services Ltd.

Tilad Ltd.

Peace Mass Transit Ltd.

Nsik Motors Ltd.
Conclusion

The automotive industry creates many SMEs (and hence jobs) to supply it with
parts and components. That is why many countries, and states in the USA,
provide policies, incentives, etc. to attract vehicle assembly. The companies in
Nnewi are in a position to reconfigure their operations so that they could supply
the assembly plants. Supplying the assembly plants will not be easy as they can
only buy components that meet the following criteria: quality, cost and delivery
on time. Hence this workshop, the first of its kind in Nigeria, to detail how you
can meet this requirements to supply the assembly plants.

I wish you all fruitful deliberations.
.
THANK YOU