The Lagos Chamber of Commerce and Industry has attributed the decline in the automotive industry’s contribution to the economy in the third quarter of this year to policy inconsistencies.
The National Bureau of Statistics report showed that the real GDP of motor vehicles and assembly in Q3 of 2023 was 2.87 per cent year-on-year lower than the 3.93 per cent growth rate recorded in Q2 023, but was marginally higher than the 2.69 per cent growth rate of Q3 2022.
“The decline recorded in Q3 2023 is a testament to automobile industry reactions to policy inconsistency, that is amplified by frequent reviews of import duties by the Nigeria Customs Services,” the President of LCCI, Michael Olawale-Cole, said in a note to The PUNCH.
According to the LCCI president, the trade policy dynamics have compelled the NCS to change the exchange rate of computing import duties several times and recently increased from N770.88/$ to N783.17/$.
Experts said the rise in the exchange rate would lead to an increase in the cost of importing goods into Nigeria, with the resultant impact of higher prices for consumers and domestic producers.
According to them, the policy has the potential to increase government revenue and reduce importation, but the uncertainty around the business environment needs expedited action.
Olawale-Cole noted, “If the government is not swift in stabilising the exchange rate, investors may be discouraged, and domestic producers will be skeptical about mass production of vehicles that are perceived costly.”
He claimed that the impact of subsidy removal and exchange rate harmonisation on the automotive industry had been mixed.
According to the LCCI president, these measures have led to inconsequential gains and losses for stakeholders in the sector.
Olawale-Cole disagreed with the data presented by the NBS, particularly regarding the substantial year-on-year increase in the imported used automobile sector.
He said, “The NBS reported a remarkable 375 per cent surge, reaching N803.4bn in the first half of 2023 compared to N169.1bn in the same period of 2022.
“However, industry experts dispute this claim, asserting that it contradicts the observed reality of low sales and importation of automobiles.”
According to Olawale-Cole, the production of locally produced vehicles that are expected to be competitive in terms of lower prices remained relatively high, and uncompetitive because over 70 per cent of the inputs to assembly plants are imported.
