Nigeria to phase out Tokunbo cars by 2034

Indication emerged on Thursday that imported used cars, otherwise known as Tokunbo, would still be around for the next 19 years.

A new report by PricewaterhouseCoopers said tokunbo cars would be phased out of Nigeria’s automobile industry by 2034 if the Federal Government under Muhammadu Buhari would judiciously implement the auto policy introduced in 2013 to encourage local production of new vehicles.

The Partner, PwC, Dr. Andrew Nevin, said the projection would only be possible if the government implemented the import tariff rates in the automotive policy, which is 70 per cent on both fully built cars and used vehicles a zero per cent on completely knocked down parts (components) for locally assembled vehicles.

He said PwC was optimistic that the purchasing power of Nigerians would have risen due to the expected growth in the real GDP of the country which would be the 16th largest by 2020 and the 9th largest economy in the world by 2050.

He, however, said the demand for used vehicles, which would not abate, would be generated internally rather than foreign imports as from 2044 when the Tokunbo cars would have become non-existent.

The group put the used cars for imported in 2015 at 335,000, which is 268.78 per cent higher than 90,840 new vehicles so far imported into the country this year.

Major auto players and experts such as the Chairman, Toyota Nigeria Limited, Chief Michael Ade-Ojo; and the Chief Executive Officer, Economic Associates, Dr. Ayo Teriba, cautioned about hurried implementation of the Nigeria’s auto policy.

The report titled, ‘Africa’s next automotive hub’, said that the production and manufacture of completely knocked down vehicles was expected to begin in 2019 and as a result, the customer preference for foreign used import will decline.

He said, “Nigeria is largely a used car market with a ratio of new to used cars at 1:134. PWC estimated that in 2014, 410,000 cars were imported into the country, about 74 per cent were used cars. An analysis of the age of these cars show that 10 per cent are less than three years old with about 63 per cent over 11 years which places Nigeria in the un-enviable position of being an attractive disposal site for old cars.”

Nevin said PwC’s findings showed that an estimated 56,000 new vehicles were sold in 2014, resulting in a 50 per cent increase from 37,000 reportedly sold in 2010.

In order for the country to achieve its positive projections for the auto industry, he said that the government must tighten the security at the borders, establish auxiliary industries and improve the chances of owning new cars.

Nevin added, “Available vehicle financing options are very important to encourage patronage of locally assembled cars. Unchecked smuggling activities could frustrate manufacturers assembling locally and slowly wipe out any progress gained in the industry. Respective agencies must ensure that vehicle safety standards are maintained. There is an urgent need to develop and build local technical expertise in the auto industry.”

Credit: The Punch