By Moses Akaigwe
The decline of presidential assent to the Auto Policy Bill passed by the National Assembly and the effect of the poor quality fuels on Volkswagen vehicles, including impaired performance of the engines, were some of the factors that prompted the suspension of Volkswagen’s operations in Nigeria.
This was confirmed by the leading global auto maker during its maiden Sub-Saharan Africa (SSA) Media Event held recently in South Africa.
Former President Muhammadu Buhari had in January 2019 refused assent to the Nigeria Automotive Industry Development Plan (NAIDP) Fiscal Incentive and Guarantees Bill passed by the National Assembly months earlier and about five years after the policy was announced by the previous government, on Wednesday, October 2, 2013.
The refusal of Buhari to give legal backbone to the NAIDP during his two terms in the saddle disappointed Volkswagen and other major stakeholders who had either made huge investments or were looking forward to an improved and encouraging environment to come in.
Volkswagen also disclosed that the prevalence of dirty and low quality fuels in the local market was another reason for its painful decision to pull out of Nigeria, insisting that its modern vehicles cannot run efficiently on such fuels available in the Nigerian market.
Also revealed as the third reason the auto manufacturer pulled out were the activities of ‘wharf rats’ who vandalise new vehicles, including Volkswagen’s, at the ports of entry by stealing the catalytic converters, thus making the automobiles to emit dangerous gases into the atmosphere.
Volkswagen explained that with the catalytic converters removed by the port thieves it cannot, in any way, offer warranty on the affected vehicles that would further compound the company’s after-sales maintenance efforts.
Regardless of the triple challenges, the German automaker insists that Nigeria is still of great importance to its interest in Africa, hinting, however, that it would only consider a come-back if the NAIDP gets legal backing through a Presidential assent to the bill and if the quality of fuels in the country improves.
“We’ll return to Nigeria soon. But the government must give us the Automotive Policy (by assenting to the passed bill) first, and more cleaner fuels,” the chairperson and Managing Director, Volkswagen Group South Africa (VWSA), Martina Biene, replied clearly on the suspension of activities in Nigeria during an encounter at the company’s head office in Kariega, Port Elizabeth on the sidelines of the media event that was attended by delegates from the African markets.
The Head, Group Communications, VWSA, Andile Dlamini, was also optimistic that Volkswagen would soon return to Nigeria.
“We’re surely coming back very soon, that I can assure you,” Dlamini remarked. “We were in Nigeria during the visit of the German Chancellor to Nigeria and talks are still going on with officials of the Nigerian Government.”
Commenting earlier at the National Sales Operations (NSO) headquarters of VWSA in Sandton, Johannesburg, the Director, Sales & Marketing, Thomas Milz, who also heads the NSO, lamented the Nigerian situation, saying a country which imports about 600,000 used vehicles annually cannot be said to be serious about local manufacturing.
Milz corroborated the reasons given by the Managing Director for the company’s decision to withdrawal from Nigeria.
“We were in Nigeria and had fruitful discussions with Jelani Aliyu, the Director General of the National Automotive Design and Development Commission (NADDC) .There is a lot of interest from the stakeholders and the AAAM (Association of African Automotive Manufacturers). We are still interested in the Nigerian market and our partner is waiting,” Milz said.
Also lamenting the frequent changes in import/excise duty, as well as what he described as the ‘’horrible fuel quality,’’ the Sales Operations Manager, Vinesh Ramchander, said “auto policy is key to our auto business in Africa.’’
He stressed that the situation currently in Nigeria ‘’offers no advantage to local assembly as the auto policy bill that was tabled in 2013 was never fully implemented.’’
On the values and benefits Volkswagen is bringing to its markets and partner-countries in Sub-Saharan Africa, which Nigeria is missing out currently, the National Sales Director, Milz, said: “We are German-based and a global player. We are guided by the Volkswagen spirit. We love the brand. We are not producing appliances but mobility equipment. We bring the German culture and heritage of perfectionism into other countries.”
Milz disclosed further: ‘’Volkswagen sells 6 million vehicles globally every year with only a fraction of that in Africa and we have to insist on high fuel quality. Cleaner fuels will allow us to offer a good combination of products.
“The Auto Policy developed for Nigeria by KPMG is one of the best but it was not implemented. The fuel quality was a disaster for us. We have plans for representation in Nigeria and we’ve identified a partner. We are waiting for the Auto Policy and the right fuel quality. With a new refinery in place (Dangote), we hope the fuel quality will improve.”
Milz added that the NSO strategy for Sub-Saharan Africa is anchored on seven pillars to achieve mobility and technology through auto connectivity. He listed the strategy, tagged ‘’WE//2025/ @THE NSO STRATEGY,’’ to include Mobility Connectivity, Digital Customer Experience, Loyalty, Brand, Sub Saharan Africa, Dealer Network and People.
With headquarters in Wolfsburg, Germany, the Volkswagen Group has 121 assembly plants globally, four of which are located in Africa (South Africa, Kenya, Rwanda and Ghana) under the oversight of VWSA. As market demand keeps shifting towards the AOO segment due to the difficult economic conditions, VWSA is working on regaining the market leadership position through robust initiatives.
Sadly, despite her huge potential, Nigeria, at the moment, does not rank among the first five leading markets for Volkswagen in Africa. The five leading markets are South Africa, where VWSA provides 4,000 direct and 50,000 indirect jobs as the single largest employer; Kenya, where it is producing in partnership with CFAO; Cote d’Ivoire; Rwanda and Ghana. Volkswagen is also developing its markets in Angola, Senegal, Mozambique, Mauritius and Zimbabwe.
During the visit of the former German Chancellor, Angela Merkel, to Nigeria and Ghana, in 2018, the Volkswagen Group signed a Memorandum of Understanding (MoU) with both countries, one a day after the other.
As part of the agreement, Volkswagen undertook to implement a phased approach in relation to the assembly of vehicles, starting from the kits with the long-term view of establishing Nigeria as an automotive hub on the West Coast of Africa.
On its part, the government of Nigeria committed to providing a conducive legislative environment that would encourage the manufacturing of motor vehicles.
The implementation of the MoU was expected to lead to the gradual transition from the importation of used {tokunbo} cars to the manufacture and distribution of new passenger vehicles.
Unfortunately, while the government of Nigeria has continued to dither, the MoU Volkswagen signed with Ghana has paved the way for the establishment of a viable assembly facility that has been producing passenger cars in the West African country.