Tuesday, May 16, 2017 5:24 pm
Toyota Nigeria Limited under the leadership of Mr Kunle Ade-Ojo has hinted that the company has remained bullish in the auto market due to resilience and customer friendly company amidst the economic downturn in Nigeria.
Ade-Ojo in an interactive session in Lagos, blamed the situation on the soaring forex and economic recession in the country. He said the instability in foreign exchange contributed to high duty on imported vehicles, which also caused increase in selling prices of vehicles.
Comparing statistics of vehicular sales between last year and the period in review, figures show only 2,000 units have been sold in Q1 2017, against 5,500 units sold same period last year. Total import in 2015, according to him, was 18,000. It dropped to 7000 in 2016, while Toyota had a share of 43 per cent of the 2015 imports and 38 per cent in 2016. Maintaining that, in all the scenario, Toyota still had the lion’s share of 43 per cent of the 2015 imports, and 38 per cent of 2016 vehicle imports.
According to him, the sharp drop was due to inability of auto importers to assess Forex, despite claims of dollar abundance by the Central Bank of Nigeria (CBN) as well as high duties on imported Fully Built Up (FBU) vehicles.
“Imports dropped about 60% from about 18,000 in 2015 to just close to 7,000 in 2016. Of course, in terms of our share of the imports, we had about 43% in 2015 and that dropped to about 38% in 2016.”
According to him, the devaluation of the Naira also affected sales last year, saying “whereas in the first half of the year the Naira was about 200 to the Dollar but that by the end of the year it had doubled. So, prices of vehicles also pretty much doubled and a lot of businesses could not afford to pay for the increase. We at TNL are struggling to survive. A lot of companies had to retrench their staff last year as a result of the tough economic situation.”
He said companies had to priortise on what they would spend their limited funds on. “Contrary to what you read in the papers that CBN have stated that money is being released but that only a percentage of it is being taken by banks, we are having a different scenario, because the banks are telling us that they are not getting this money from the CBN.
“And as a result, banks are not even able to provide the funds for us to bring in goods. And if you are to even try and get or utilize whatever facilities you have with the banks, the banks would expect you to look for the cash, because they don’t have the Naira to lend us.
“So we have to borrow the Naira from bank A to fund the dollar being borrowed from Bank B or give it to the bank that is going to give us the fund. So we are double borrowing. We are borrowing in dollar and still have to back it up with Naira. And they will tell you they are not going to give you the dollars unless you have the Naira.
“So we have to go and borrow the Naira to supplement the dollar. So even though there has been an appreciation in the Naira against the dollar, other significant costs are impacting the value of goods. That is why a lot of distributors have not been able to adjust their prices ”
Despite the glooming outlook of the months ahead, Mr. Ade Ojo assured that his company has remained on top of the situation, adopting risk management approach.