Vehicle acquisition stalled by high interest rates – National Assembly

The National Assembly has noted that double-digit interest rates from the banks have contributed to the partial failure of the National Automotive Industry Development Plan (NAIDP) 2013.

Daily Trust reports that the NAIDP was enacted to ensure the growth of the automotive industry, especially local vehicle assembling.

Chairman House Committee on Industry, Hon. Enitan Dolapo-Badru, spoke during the tour of the Coscharis Automobile Company in Lagos.

Dolapo-Badru however praised the Coscharis Group for supporting local assembling through its multi-million dollar plant at Awoyaya.

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The lawmaker stated that for any auto policy to work, it must be supported with a strong legislative framework to make it work.

He said the auto policy wasn’t supported by the current macroeconomic environment as the interest rate is around 28 per cent.

He said: “That scheme was supposed to work with the banks, but the banks scuttled it because on their own parts, they told the consumers to come and pay 28 per cent or so interest rates on loans. So, it didn’t work, but right now, we are trying to work out a scheme whereby the commercial banks are totally out of it.

“You can’t call somebody who is surviving to eat to come and buy a car. I think there should be a payment plan; leave the banks out of it. You can’t tell me to come and pay 35 per cent interest on N20 million for instance. That interest rate alone can pay school fees, feed the family for a year. You cannot add expenses to an already strained expense of an individual.

“The way forward is for the assembly plants and the National Assembly to come out with a scheme, which can encourage buying of new products. The buyer can be guaranteed for the next 10years. The scheme must be able to accommodate the consumers.”

He praised Coscharis for taking the bold step to put up quality assembling plants across the country, employing qualified Nigerians and contributing to the sector’s Gross Domestic Product (GDP).

He, however, suggested that the company should go beyond targeting the government for sales of its vehicles, stressing that over 200 million Nigerians should be its primary market.

Group Managing Director (GMD), Coscharis Group, Mr Josiah Samuel, highlighted the contributions of Coscharis to the development of the auto sector.

“If there is any policy, programme to help to engender and improve production, I think we are here to embrace it. So, 10 years ago, we praised the auto policy and we quickly engaged our partners, we started a Semi Knock-Down (SKD) plant in one of our factories at Ikeja, just to enable us quickly key in and concurrently as it were, we started working with our partner, Ford Motor Company to build a new factory at our Awoyaya factory.

“There were a whole lot of things in the auto policy that were to help in driving demand because it is a game of numbers. The policy around how to curtail and gradually reduce the importation of used cars, single digit finance scheme to incentivise those who want to buy new cars. That was also in place.

“But, most of those incentives to help drive auto production locally were all altered and events overtook them by the amendment to the policy that sort of reduced the levy on import from 35 per cent to 20 per cent, which discouraged local assembly or production,” he said.