As Dangote Peugeot Assembly rolls out new cars

 From Abdullateef Aliyu, Lagos

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igeria’s auto industry has received a boost as Dangote Peugeot Automobiles Nigeria Limited (DPAN) has started assembling vehicles in Nigeria, beginning with the Land Trek, 3008, 5008 and the new 508.

This is coming almost four years after Dangote Group entered a joint venture with PSA Peugeot Citroen, along with five northern state governments to re-start assembling of cars in the Kaduna plant by the first quarter of 2019

 Since then, the Federal Government Group has granted approval to Dangote which previously expressed interest in the former Peugeot plant, now known as PAN Nigeria Ltd.

The Dangote’s newly built Green Field Assembly Plant in Kaduna can assemble 120 vehicles per day across two shifts.

The DPAN management explained that the vehicles to be introduced would be of high quality and aesthetics as well as rich technological endowment and safety features.

“With the New Green Field Ultima Assembly Plant, a lot is being done by DPAN to ensure visibility of the Peugeot brand and availability of spare parts to the network and the generality of Nigerians,” Dangote said.

DPAN plans to reposition the brand in the short, medium, and long term in order to ensure customer satisfaction and sustainability.

The statement said: “This dream has started with the re-launch of the Peugeot brand in Nigeria as well as the local assembly of the 301 at our new Kaduna plant and thereafter the introduction of the Landtrek, 3008, 5008 and the new 508…Nothing is being spared to enable market recapture, hence all hands are on deck to ensure not just survival but also continued growth in a market with potential for cars in excess of 100,000 units per year and growing.

The company noted that it is not unmindful of the reality that it is re-launching the roaring lion brand amidst socio-economic challenges, steep competition, cheaper and sometimes sub-standard Asian models as well as COVID-19 realities.

The management, however, assured that it is confident that the popularity and reputation of being reliable which the older generations of the vehicles earned across Nigeria over the past decades with 404, 504, 505, 406, 306 and others, will drive the new generation of vehicles now being assembled at the DPAN plant in Kaduna, to the top of the market.

It said, “With the New Green Field Ultima Assembly Plant, a lot is being done by DPAN to ensure visibility of the Peugeot brand and availability of spare parts to the network and the generality of Nigerians. DPAN will be encouraged by our technical partner to reposition the brand in the short, medium, and long-term as we ensure customer satisfaction and sustainability.

“This dream has started with the re-launch of the Peugeot brand in Nigeria as well as the local assembly of the  301  at our new Kaduna plant and thereafter the introduction of the Landtrek,  3008,  5008 and the new  508…Nothing  is being  spared to enable  market recapture, hence  all  hands  are on deck  to  ensure not  just  survival  but  also  continued  growth  in  a  market  with  potential  for  cars  in  excess  of 100,000 units per year and growing.”

In addition, the management has re-energized contact with some existing Peugeot dealers and major customers to fast-track the re-entry into the market and provide excellent customer service and satisfaction both in the short, medium and long term.

This is expected to impact positively on sales volumes, product visibility and overall profitability for all stakeholders.

Stakeholders however believe the DPAN would be a veritable value addition to the indigenous auto industry and a commitment of the Dangote Group to drive industrialization and massive job creation which the auto assembling activities afford.

Mr. Luqman Mamudu, former Acting Director-General of the National Automotive Design and Development Council (NADDC), in a chat with our correspondent however observed that indigenous operators would have made more headway if the Federal Government had not slashed the duty on imported vehicles as provided in Section 38 of the 2020 Finance Act.

He said, “Automotive assembly activities including that in the new DPAN are always a plus for an Indigenous automotive industry. Local Value addition derived from assembly activities is usually marginal, especially for car assembly where it can be between 10 to 18% depending on if its SKD (semi-knocked down) or CKD (completely knocked down) with the welding process. Local value-added can be much higher in commercial vehicles if bodies are fully fabricated locally.

“Nigeria has done well in this regard. I am not too sure of the installed level of assembly in DPAN but I trust Dangote’s capacity to upgrade rapidly.  I was directly involved in the establishment of the company’s truck assembly in Lagos although the speed of upgrade may have been limited by the ill-advised section 38 of the 2020 Finance Act which totally discourages commercial vehicles assembly in favour of outright import.”

Mamudu, who is the Managing Partner, Transtech Industrial Consulting, said the government needs to protect the local players in order to break even.

“The fact is that most of the inputs to our assembly plants are still imported in the form of knocked-down kits due to policy constraints. Assembly still remains a critical foundation for local content development.  If the government can protect the local market for existing assemblers including DPAN, assembly capacity will certainly reach a critical volume attractive enough for parts manufacturers abroad from whom kits are imported presently to locate in Nigeria.

“Local content addition will then grow rapidly for increased value addition, quality employment and sustainable industry. The Ministry of Industry, Trade and Investment must get the National Automotive Industry Development Plan (NAIDP) endorsed by the government to attract FDI. I don’t know why they are holding back. I congratulate DPAN.  It’s a very good addition to the industry and a clear commitment of Dangote to keep jobs in Nigeria,” he added.

How the journey started

The journey of the automobile plant began in 2016 when the Kaduna State Government, Dangote Group and the Bank of Industry (BOI) were to acquire majority shares of Kaduna-based moribund Peugeot Automobile.

The Dangote-Peugeot Automobile Nigeria Limited (DPAN), a joint venture of PSA Peugeot Citroen, Dangote Group and five state governments in Nigeria (including the Kaduna State Government) will see about 3,500 cars assembled in 2019.

It was reported that DPAN will commence operations with ₦3.5 billion equity and about $5 million worth of working capital. There are plans to raise additional capital.

The report also disclosed that Dangote will own a majority stake in DPAN while Peugeot Citroen will own 10%. Peugeot will also operate the plant.

AMCON acquired a majority stake in PAN in 2012 after taking over the company’s debts worth about ₦30 billion owed to some Nigerian banks.

PAN was incorporated on December 15, 1972, as a limited liability company with an authorized share capital of N3 million. It commenced full operations on March 2, 1975. The company, however, ran into trouble barely two decades after commencing operations.