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It is unviable for a country to own assembly plant

…says Nissan Chief

The Nissan Group of Africa has said it is unviable for every country in the Economic Community of West African States (ECOWAS) to own a Vehicle Assembly Plant.

The auto giant said rather, each country should concentrate on its area of comparative advantage.

Nissan, therefore, sought a master-plan that could make Regional Trade Agreements in ECOWAS sustainable and competitive.
It’s Director of Sales and Operations, Jim Dando, suggested that while some countries should specialise in producing Tyres, others should concentrate Batteries and Shock Absorbers and those countries which do not, could assemble vehicles.

However, he warned that countries should not produce the same vehicle.

On the demand for vehicle plants in the region, Dando said: “Investing in an automotive plant is a huge undertaking, where there have to be incentives in place for the Original Equipment Manufacturers (OEMs) and there has to be a very strong message against grey import market because these cars are being brought in cheaper than we can make them.”

He said grey imports were problematic, not because they skew the market, but because they create expectations about After Sales Service, which the manufacturers often couldn’t meet because the vehicles are not made for Africa and, therefore, there can’t be Spare Parts or technicians to service them.

He urged the various governments to be proactive and not be misled by the huge revenue in duties that accrue from grey imports.

“The challenges we wrestled with are that used cars are imported in great quantities, and it is assumed that they generate a lot of revenue in duties and sometimes, governments are blinded by this, and when this happens, it blocks opportunity for industrialisation,” he said.

The governments, he said, should raise Import Tariffs and Duties on grey imports and drop the duties on locally made vehicles, allowing the OEMs to import other range of vehicles at discounted duties.

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3 COMMENTS

  1. I think it makes sense. There are the fears of mismanagement, infrastructure and corruption which may affect quality of the products. Comparative advantage makes sense.

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