From Nnewi To The World: With Apologies, My Alternative Auto Policy

I know I know. Yoruba people say you shouldnt go back to say ‘Good evening’ in a place where you have already said ‘Good night’. I did in fact promise not to write on cars again but if I break a promise so early in the new year, I have the rest of the year to make it up I reckon.

Let me try one more time. This time I will turn 180 degrees from abuse to praise singing. Here goes….

Dear,

Chief Dr. (Dr.) Olusegun Aganga, Honourable Minister for Trade and Investment, The Golden Man of Goldman Sachs. You are in an Aston Martin while your enemies are chasing you in a 30 hour Lagos to Kano train. I pledge unalloyed fealty and stainless loyalty to your ever-expanding kingdom. After you Sir, it is you again. Sir, your enemies are at liberty to jump into the undredged River Niger if they cannot abide your relentless drive to develop the Nigerian economy. Happy New Year Sir. 

I write this open letter to you, not to heat up the polity as some are wont to do or prompt an investigation of me by the relevant authorities, but to propose an alternative automobile policy that is much simpler, cheaper and less painful to Nigerians and which can achieve all the things you want with the current policy. I know you are a busy man so I will go straight to the point(s)

1.  Sir, I’ve looked through your ministry’s budget and I cannot see any line item for the purchase of document shredders in there. Is it too late to add this? I ask because the first step of the Alternative Auto Policy (AAP) I am proposing is for you to gather all the copies of the current policy you are proposing and shred them. Please stay with me Sir, I am going somewhere.

2. Have you seen the video below? I imagine you have but on the off-chance that you havent, let me post it here again.

Rather than start from the bottom like the rapper Drake, my AAP proposes to start around the middle. The first step of this policy I am proposing is to adopt Innoson Vehicle Manufacturing as Nigeria’s de facto auto policy. Sir, they are already making cars in Umudim, Nnewi in Anambra State. So rather than wait for Nissan and the likes to come open plants here (in itself not a bad thing) let’s support Innoson in some smart ways.

3. The first step of my AAP is to completely ignore the Nigerian market. Yes, trust me this makes sense. Government support for IVM should be tied entirely to exports. So please, dear God, don’t get Mr. President to issue a directive to all government ministries and departments to only purchase Innoson vehicles. It will be very counter productive. Ignore Nigerians, trust me they are not worth the stress. I will explain this further below. Mandating government to only buy Innoson cars will ruin a fundamental part of industrial learning viz carmaking – the feedback mechanism. Also, knowing what civil servants can be like, they will quickly turn such a directive into a racket.

4. Hire a top-notch PR firm, preferably a European or American one to clean up the company’s image. They will take care of little things like Innoson listing Gmail and Yahoo! addresses on the contact page on its website. These are small things but they do matter – it might be the difference between them getting a feature in a popular newspaper magazine if the hack in charge is not impressed by such an email address. As a wise Nigerian man once said – packaging is everything. You will also need to spend heavily on advertising. Hire a firm that knows how to advertise across the continent.

5. So where do we export Innoson cars to? I suggest we use a crude measure to pick say 10 countries. According to the World Bank, Nigeria’s GDP per capita is currently around the $1,500 mark. Leave aside the accuracy or not of this figure for a moment – pick 10 countries in say Asia and especially Africa that are around that mark or less. So obvious countries would be Kenya, Ghana, Sudan (soon as they stop fighting), Uganda etc. You get the gist. We are looking for countries with an infrastructure deficit like ours. I reckon the IVM G5 stands a good chance in countries with bad roads like ours but which your Glorious Transformative Government is urgently addressing.

6. This is where you will start spending serious money. You are going to subsidise Innoson vehicles for sale in these markets. The price will have to be low enough to account for the lack of brand awareness and competition from established brands. Forget about making any profits at all, that’s not the point for at least the first 3 – 5 years. If people are going to enter a car named after an Igbo name from Eastern Nigeria, we will have to meet them halfway. Simply put, the price of Innoson cars exported to these countries will have to be significantly cheaper than anything on the local market. So prices will have to be tailored for each market.

Government support can be tied to a specific amount for each car – say for each IVM G5 sold in Uganda, the AAP can commit to paying $2,000 to ensure Ugandans take notice of the price difference.

7. Dont close your cheque book yet Sir. Another market share gaining strategy will be for Innoson vehicles to be sold with market beating warranties in those countries. I recommend 3 years parts warranty on all Innoson vehicles. Or more even. This is going to cost a lot of money because Innoson are basically untested fully by the market. The AAP hopes for the best but prepares for the worst. Once the rubber hits the road expect all kinds of feedback. Let us be humble – last year the great Toyota recalled almost 1 million cars to fix issues with the airbags. This life is a pot of beans and no one really knows what might happen when once the cars are out there in the hands of customers. Trust me, you don’t want Africans on the internet posting photos of broken down Innoson vehicles on Twitter, Facebook and Instagram. This means Innoson will have to maintain a high level of spare part stock to ensure it can answer replacement needs quickly.

This is why it is important to avoid going down the route of mandating government purchase of these cars. Civil servants have an incentive to change government cars as often as possible anyway so they wont really care if the cars have issues. Innoson wont get the brutal feedback it needs to improve from government sources.

It is also why Nigerians should be ignored in the AAP. I know what they are like – the easiest way to get them to buy the cars is to have it validated by ‘foreigners’. Also, ignoring Nigerians helps us resist the temptation of tariffs that our governments like so much. When Nigerians don’t buy the cars, the next thing will always be to target imported cars as the enemy, achieving nothing. In fact, I suggest that the price of Innoson vehicles in the Nigerians are raised as high as possible to make up for the foreign subsidy but the AAP will make cheap financing available for Nigerians who choose to buy them. But please don’t force them to buy it.

8. As part of this AAP, Mr Innocent Chukwuma will be promoted to Chairman (with his ownership structure of the company untouched). A CEO with solid experience of selling cars in emerging markets should be hired on a time bound contract of no more than 5 years. Aim for the very best you can find. We cant get someone like Carlos Tavares but you get the idea – talented, proven track record at the highest level and multi-lingual (he speaks 4 languages). Even if you cant find someone with auto manufacturing experience, someone with solid knowledge of international supply chains will do the trick.

Mr Chukwuma can return as CEO after 5 years by which time the process of weaning Innoson off the AAP should have begun.

9. As part of this AAP, kindly return all auto tariffs to where they were before. Thank you. No need to add more corruption and smuggling to the problems we already have.

10. Pray. Yes, you will need to pray. Against faceless witches and unnamed wizards. Against saboteurs and permanently bitter people. Nothing is guaranteed of course but you can make your own luck.

So why all this aggro in the name of a policy? Let’s be honest with ourselves, Innoson wont even employ 20,000 people anytime soon and the AAP is aiming for the export market. There are a couple of reasons for this. The first is to avoid the [Name withheld] situation where Nigerians feel exploited in the name of making one man very rich. If the government is going to pick winners, you can at least avoid the downsides of doing so as best as you can. If you are exporting the cars based on this AAP, the no one can really say they were ‘exploited’ to buy the cars which we are effectively bribing them to buy. I cant say this enough – leave Nigerians out of this.

The second reason answers the jobs question. Why are we doing this? The answer is something that is not easily quantifiable – pride. Be honest, you and me and millions of other Nigerians, want a car manufactured in Nigeria for reasons of pride. You cannot add pride to GDP but it will be there when Nigerians can boast about such cars in foreign countries. It will be there when news stories around the world are written about ‘the upstart car maker that began life in a sleepy town in eastern Nigeria’.

But most of all it will be there when Nigerians, unprompted, start buying Innoson vehicles based on a CNN report on ‘the Nigerian car maker that has come from nowhere to grab a huge share of the SUV market in Uganda‘.

Is this all too hard? Ehn, no be you talk say you wan industrialize Nigeria?

Remain blessed Sir. It is well with you and yours. You will eat the good of the land.

FF

P.S Sir, I must confess that there is absolutely nothing original in this AAP I have proposed. Nigeria itself has been on the receiving end of such policies before. Have a look at the book extract below taken from the book Korean Dynasty: Hyundai And Chung Ju Yung

Screen Shot 2014-01-01 at 12.41.07

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21 thoughts on “From Nnewi To The World: With Apologies, My Alternative Auto Policy

    1. Good thing that the talk on manufacturing and exports is catching on. Need throw all these import substitution policies into some well then call upon Oyedepo to pray it down to hell or something. We should do same to all this rudimentary talk on youth employment and agriculture.

  1. The only minor issue I have with this installment is the recommendation that Nigerians should be kept out of it. I beg to differ here. Just as the German Chancellor and indeed most of those working in her government would not be caught dead in a car that is not German made Mercedes Benz; Ditto the UK Prime Minister and other public servants are generally ferried around in British made cars; American President as well; I see no reason why Nigerian Presidents, V.P., Ministers and their many thousands of Special Assistants and even the law makers should not be mandated to use the locally made Innoson brand. Ever been to a German airport or taxi rank before? The vehicle of choice for taxis is naturally German made Mercedes E-class. Why can’t we adopt similar strategies with Innoson – via cheap and affordable financing? Or do you think the average German taxi driver can afford a new E-Class Mercedes? So really, I don’t believe we should shut out Nigerians altogether. For starters, the known and unknown multi million scandals relating to purchase of over inflated BMWs would be a thing of history!

    1. China has about 10 car manufacturers but their government officials use Audis very widely.
      We will get to that point because I can assure you, there’s no German policy’s dating use of German cars as taxis – their cars are bloody good.

      The influence of govt in nigeria is very corrupting from experience.
      The time will come when no one will need to be mandated to buy the cars

    2. You miss the point. The idea behind shutting out Nigerians is to drive up quality in the shortest possible time. It is only a temporary measure. Nigerians will only be proud of these cars if the quality is internationally acceptable.

    3. @Ken, it does make sense if these cars can compete well abroad they will return with this strength back home. I think the except on Hyundai is a case study.

  2. I’ve always wondered why the Korean Auto Policy wasn’t replicated instead. Thank you for calling attention to it

  3. The only thing I would add is that we should include some Asian, South American and European countries. This is because there are some of those countries that will be impressionable to Nigerians, Africans and the world at large that will boost global demand for the Innoson cars.

  4. I chose to read this as an illustration of how an Alternative Auto Policy would work in the case of one company.
    It may be a silver bullet but it certainly is not industrial policy if its scale is limited to one company.
    If nothing at all, moderate success with one company will certainly bring the challenge of scaling up: other entrepreneurs would see that success for the opportunity that it is, Nnewi has the capacity to produce more companies, the markets have capacity to absorb the products and services of more companies, competition and cluster dynamics combine with feedback to form a tripod on which industrial learning can be placed.
    An alternative policy which has a rollout strategy that pushes one company would have a central, scalability component.
    The context that nurtured the chaebols should be looked at, in addition to the policies. More importantly, the cluster dynamics of Nnewi should be looked at.

  5. Well guys, let us hear from the horses mouth. Here is a link of Innossons himself talking about Car Manufacturing in Nigeria, Sales and the Nigerian Government. He even talks about the Tarrifs on imported cars in Nigeria. It is only fair that his voice is heard cos he is on the front lines as a manufacturer and an employer of labour whilst we are behind our screens.

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