Ford gives conditions for establishing factory in Nigeria

2014 Ford Ecosport
| credits: File copy

Ford Motor Corporation says it has not foreclosed the establishment of an automobile assembly plant in Nigeria, but insists that the conditions must be right for it to do so.

One of the conditions, according to the firm, is for the country to have a free-trade agreement with its neighbouring nations to ensure free movement and unhindered market for all locally produced vehicles and other goods within the West African region.

The President and Chief Executive Officer, Ford Motor Company (South Africa), Mr. Jeff Nemeth, who dropped the hint, said the American automaker would not risk having a vehicle assembly plant in the country unless there were ready markets for its products.

Nemeth spoke to some journalists at a forum facilitated by Coscharis Motors, one of the two representatives of Ford in Nigeria.

Although he said Ford already had vibrant assembly plants in South Africa supplying vehicles to different parts of Africa, including Nigeria, the firm was still studying the new auto policy of the Federal Government and the business environment to determine the viability of a local assembly plant.

The Federal Government had raised the tariff on imported cars from 22 per cent to 70 per cent, as part of the new auto policy announced in September last year for companies without assembly plants in the country.

It allowed local manufacturers of cars to import Completely-Knocked-Down vehicles at zero per cent and Semi-Knocked-Down parts 1 and 2 at five per cent and 10 per cent, respectively, as a way of encouraging automakers to start assembling their vehicles in the country.

While Nissan and Hyundai have rolled out the first set of locally assembled vehicles to join existing local auto firms such as the Pan Nigeria, Innoson Vehicle Manufacturing of Nnewi and the National Trucks Manufacturer of Kano, Kia and a number of Chinese automakers are warming up to start assembling.

But Nemeth said Ford would not be rushed into setting up an assembly plant in Nigeria without a fully developed and functional support service system such as road, railway and electricity.

He said, “You don’t want to import parts for ever. All the support structures have to be in place such as the IT, road, rail and power; that, I have not seen.

“What are the sales opportunities in Nigeria right now? You are just selling about 100,000 new vehicles annually. That is rather too small for all the industry players to share and break even if they must assemble the vehicles in your country.”

According to him, Ford is getting about 10 per cent share of the whole auto market in Nigeria, which amounts to 10,000 vehicles out of the 100,000 units.

Nemeth said in South Africa, Ford controlled about 12 per cent of the auto market, which he gave as 650,000 vehicles yearly.

He explained that out of the 650,000 units being produced by all the auto assembly plants in that country, about 300,000 were exported to neighbouring countries, which had free-trade agreements with South Africa.

The Ford boss said he planned to discuss the issue with the Minister of Industry, Trade, and Investment, Mr. Olusegun Aganga, soon at a global business meeting in Washington D.C. United States.