Saturday, October 22, 2016

Automotive sector struck by double tsunami, says Elizade boss

The Managing Director of Elizade Group, Mr. Ademola Ade-Ojo, has lamented the difficulties being faced by automotive dealerships in the country, saying that the sector was hit by double tsunami in less than two years.
Toyota Prado
Toyota PradoToyota Prado
Mr. Ade-Ojo whose company is foremost dealer in Toyota brand and representative of JAC Motors in Nigeria said that the sector was trying to adjust to the new auto policy introduced two years earlier, when recession set in with problem of sourcing foreign exchange for their business.
Speaking at the 2016 Fleet Managers forum organised by his company at Sheraton Hotel, Lagos, entitled: “Innovation at work” Ade-Ojo said. “We have put up plants, investing billions of naira into assemblage however, when setting up plant; you are to have markets for the vehicle you want to build. But what we see today is a shrinking market. In 2014 we had total size of 50, 000 units but the market size has crashed.
“Market size is going down, while we are increasing market capacity. We already tabled our plea before the government; there are only two countries with the kind of population we have that do not have viable automotive sector.
Preventive maintenance
In terms of population and size, Nigeria should have a viable auto industry. But as much as 800,0000 used vehicles are being imported into the country, we can’t favour importation of ‘tokunbo’ vehicles and expect a new car market to grow.
“Things are getting more difficult than we expected. We can’t make new purchase to go ahead with our businesses. The market is grossly uncertain. With a population of about 180 million people, Nigeria has the potential to manufacture vehicles, but how can we attract investment if we make the situation uncertain to investors?”
Ade-Ojo, who said the organisation has offered 50 per cent reduction on cost of labour and 17.5 per cent off cost of spare-parts to help customer prioritise preventive maintenance as way of surviving the harsh economic condition, said government must address fundamental challenges in the sector to create a viable automotive industry.
Urging government to create a viable finance option to ease vehicle purchase, Ade-Ojo said: “We are in a very tough time in the country. Today, the exchange rate is over N500 to a dollar in the parallel market. While others are facing the economic downturn, we are confronted with the forex problem and the challenges of automotive policy.”
The African Association of Automotive Manufacturers, AAAM, had told the Buhari-led administration to promote a policy environment that is conducive to the development of the automotive sector if the country is willing to unlock the economic potential of the continent. Lamenting that prices of new vehicles have risen exponentially, Ade-Ojo said the automotive policy and dollar-naira inequality left the organisation with limited customer satisfaction options.
For this reason, he said the company introduced another quality product from China, the JAC brand. “We will remain relevant by offering products that could deliver optimium value for money,”he said, adding that JAC brand offers value for money despite being a Chinese brand. “It is a tested and trusted brand,” he said.
Ade-Ojo said the organisation would reinforce its partnership with users to deliver maximum level  standard and innovation that would reduce the challenges as recession hits. “We have invested so much in IT to improve our services so that we can manage and deliver value to customers,” he disclosed.
Ade-Ojo, who disclosed that  his company was working on new service centres as it look out for new ways that would reduce challenges for vehicle users, said the country needs to stand together and tackle necessary challenges with one voice.
In his remark, the chairman of Elizade Group, Dr. Herbert Ajayi, noted that the endless delay in the review of the nation’s automotive policy is creating a challenging market scenario for industry operators, saying that the situation is going from bad to worse.
Indeed, the billions of naira invested in setting up vehicle assembly plants are being threatened, as players said government’s poorly planned automotive policy and the current revenue shortfall in the country subjected the sector to many challenges that may continue to deter foreign investors.

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