As the debate on the new automotive policy approved by the Federal Executive Council rages, Chairman, Innoson Vehicle Manufacturing Company, makers of IVM range of vehicles, Chief Innocent Chukwuma, in this encounter with Festus Akanbi, says local vehicle production will bring about 40 percent drop in prices of new vehicles
Stakeholders in the nation’s auto industry have continued to express divergent views on the new automotive policy unveiled by the Federal Government a fortnight ago.
The policy, approved by the Federal Executive Council penultimate Wednesday, according to President Goodluck Jonathan, was aimed at transforming the nation’s automotive industry and attracting investment into it. Under the new policy for which the council is seeking legislative backing from the National Assembly, procurement of all vehicles by the Federal Government should be from local assembly plants. The only exception is where such vehicles are of specialised nature.Timely Intervention
However, the Innoson chairman believes the Federal Government has done the right thing by setting the stage for the development of the Nigerian automobile industry.
“I think it was about time someone gave serious thought to the issue of developing the country’s automobile industry. I think it was about time someone opened the eyes of the nation to the huge losses the country has been incurring in importing motor vehicles into the country.
I think it was time the country got energised to move forward and recover the several years of opportunities that have been lost by following the easy way out of making everything available to Nigerians but denying real value to the economy.
Now having said this, I must commend the present government under His Excellency, Dr. Goodluck Jonathan for the bold step that have been taken towards not just ensuring the reduction of the importation of fairly used vehicles bus also making the encouragement of local manufacturing a serious matter of government policy.
The government captures that amount of money the country would save when local capacity in vehicle manufacture is developed. But what they did not capture is the massive boost the economy would get in terms of employment generation and what in economics is called localisation.
“You see, we have been in this business for more than seven years driven solely by faith in our country. It has been tough. But I can assure you that when this policy takes root, and the industrial clusters begin to develop in our region, Enugu and Anambra, many more allied industries that will feed factories like us will develop and that is even more jobs, more capital injection, more hands-on training and development for the industry and more research that can afford us the truly Nigerian cars, like the ones we are building at the moment.
I bet you, Nigeria is in pole position to rule the African motor vehicles market if this policy is followed to the letter,” he said.
Making the Difference
Insisting that the company is determined to make its impact felt, he said, “At Innoson, we are already making the desired difference by taking the bull by the horn to market truly Nigerian cars – original in design and brand. We are not selling franchises. We are not an assembly plant for some foreign franchise.
“We are an original Nigerian brand. I am sure you know the perception challenges such a project could face but we confronted it head on and to me that is a major difference.
But taking this further, we will be buoyed by this to really begin stronger push of the IVM brand, engage in more research to improve on what we already have and convince smaller investors to place their bets on the sector so that some of the components we need to make our vehicles can be made available on demand and at value costs to the business.
When this matures fully, you can be sure that Nigerians would be able to buy tasteful brand new cars, made truly for Nigeria and at very low cost. You can be sure that with this policy, cost of motor vehicles in the country would progressively drop and as a player, I see cars costing 30 to 40 percent less.”
Will Nigerians Buy Locally-Made Cars?
Chukwuma argues that contrary to the view expressed in certain quarters on the popularity of local brands among the people, Nigerians will buy made in Nigerian cars.
“We have had to deal with that since we started but I really think that is exaggerated and I have facts to support this. Before Nollywood, Nigerians were feasting on Hollywood and Indian films. Chinese films were also very popular.
But now what is the situation? With the emergence of Nollywood where Nigerian and African stories are told with steady improvement and with that touch of the African passion, most of us have forgotten that there was a time we thought Nigerians could not make films that would sell.
“The same revolution happened in the music industry.
If you ask the young person today, he will rarely remember all those foreign musicians that held sway here those days. There are still very good foreign artists playing but the fact that Nigerian musicians have so improved their works are now exported to those countries where they compete with the so-called foreign musicians is evidence of how far they have come. In the field of fashion, we are seeing the same thing.
The truth is that Nigerians like good life and good life comes with quality products and services.
The revolution that happened in these other industries is what is about to take place in the motor manufacturing industry in the country and I am optimistic the country will soon begin to flaunt Nigerian motor vehicle labels. Here in Innoson, we are already looking at the larger African market,” he explained.
The Spread
The chairman explained that Innoson has its footprints in various parts of the African continent.
He said, “We are in various parts of Africa at the moment. For instance, our vehicles are now bought and sold in Ghana. We are selling in Cote d’Ivoire, Mali. In Chad, there are Innoson vehicles.
And the interesting thing is that in these countries, our vehicles are so well accepted you would think we had been in the market for several decades. Their satisfaction is not just from the mere fact that we were able to give them good quality motor vehicles.
They take pride in the fact that this is an African initiative that might be a test case for the kind of leapfrog the continent could witness of all talents are harnessed towards that purpose. In other African countries where we have sold these vehicles, the joy that we have seen is greater than what was the case in our home market, Nigeria.”
Production Capacity
Asked to give the company’s production figures so far, Chukwuma said, “The number is quite huge, to be modest. And I will give you this explanation.
Our production capacity is 300 units of different models of motor vehicles monthly. So if you realise that we have been in this business since 2007, I am sure you should have an idea of just how much we have done. In essence, it means that we would have sold close to 30,000 units of vehicles since we began.
The interesting thing is that we do not produce to stock and sell. We produce according to demand and supply as soon as we roll them off our production line.”
Over-dependence on Importation
On the high appetite for imported cars, he said, I think there is a lot of confusion in Nigeria. The fact is that most of us are not alive to the fact that there is no one from outside the country that can develop this country except Nigerians.
We have kept looking outside the shores of the country for development direction when we should be looking inwards to determine our own peculiar development imperatives and design such the way it would suit us.
“We have Indians and Chinese all over the country masquerading as foreign investors but these are just business men that are interested in how much they can earn here and repatriate to their home countries.
I am sure you are aware that the present government has many initiative designed to make Nigeria an industrial haven. They are doing so many things to encourage local enterprise. They are providing avenues for local capacity building in so many areas, especially manufacturing.”
Impediments to Industrialisation
He explained various types of impediments facing local initiatives in Nigeria. ”While I acknowledge that there are impediments to industrialisation in terms of cost of credit, poor infrastructure and many other factors, I am also of the view that those are not great stumbling blocks because if you check the cost of importation, you find out that it pales in significance when you compare it with the added values that manufacturing in the country has to offer to both the business man and the market.
I give you an instance; when I started my manufacturing businesses, the country was no better in terms if either infrastructure or cost of funds or even security.
“I built the foundation of this business on poor infrastructure and factored all of them in the business plan and I know that there are still great opportunities.
We are even witnessing improvements, especially in the area of power generation.
This means that if it further improves, we are at a greater advantage. The point to note is that in those other countries where we import from, the cost of production is also high in many other areas.
For instance, in Japan, the cost of manpower is significantly high when compared to what we have here. You have to pay huge salary to staff and that is relatively speaking, not the case here.
If you convert the average salary of the Nigerian employer to the dollar, it is nothing compared to what the Japanese earn. So when you spread the differential across cost areas like power in the case of Nigeria, everything evens out,” he said.
Cost of Credit
But are Nigerian banks living up to the billing in terms of support to local manufacturers, Chukwuma said no. “I am one of those that believe that Nigerian banks are designed not to support industrialisation. Any manufacturer that depends on the regular banking system for credit support is doomed to failure.
I am sure that was why the government in its wisdom, set up the Bank of Industry (BoI). As far as I am concerned, it is only the Bank of Industry that can support any industrialist and help him of her to succeed. In our relationship with this institution, we have been able to get all the support we need. There is nothing we need that BoI has not been able to give us.
What they need is just for you to have a proper repayment plan and traffic. Once you do this, they will make sure your business grows and prospers. They will help you source for equipment and plant facilities.”
Survival of the Brand
He explained that he was not the only one behind the Innoson dream. “There are several other people that are a part of this vision and all of us are working to ensure that we leave a legacy that will survive generations. We are mere mortals and do make plans of our own. But God is the final voice in everything.
But we have structured Innoson right from the onset to ensure generational relevance.
For instance, I have refrained from making this the regular family business that Nigerians are familiar with.
As we speak, I am the only person in my family that is working in this group and it is a deliberate strategy to exert high standards of performance and raise managers who will drive the vision beyond family boundaries,” he said.
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