By Moses Akaigwe
Mike Whitfield is the Managing Director of Nissan South Africa and President, National Association of Automobile Manufacturers of South Africa (NAAMSA). As the Vice President of African Association of Automobile Manufacturers (AAAM), he was part of the continental body’s delegation that recently met with President Muhammadu Buhari at the Aso Rock Villa, alongside other top government officials elsewhere in Abuja. In this interview at the venue of the just ended Festival of Motoring in Johannesburg, South Africa, he reflects on the issues discussed during the Abuja meetings, expressing high optimism that they would be addressed by the government. He also speaks specifically on the need for a legislative framework for the automotive policy; effect of grey imports and second-hand vehicles on the efforts to grow patronage for locally made vehicles; and the imperative of drawing a line between CKD and SKD manufacturing. Whitfield wishes that Nigeria would redouble its efforts to rev the implementation of the auto policy.
Being the helmsman at Nissan
I have grown up in the motor industry. It’s the only job I have ever had. I have only worked for Nissan. I joined Nissan at age 21 as a trainee – immediately after university. I had the unique opportunity of working in just about every area of the operation. During my course in Nissan, I have been in the truck business when we still owned UD Trucks or Nissan Diesel as it was known in those days. I had a fortunate opportunity of developing and opening up our Nissan operations in Northern Europe and, in fact, I spent four years in Finland and developing Nissan’s businesses in Denmark, Norway, Sweden, Finland and the Baltic states. I then came back to South Africa approximately five years ago to focus on developing and growing our presence, not only in South Africa but particularly in Africa. So I’m a Nissan person, that’s the only job I know, it’s the only place I’ve been, and certainly it’s a great company to be part of and a great brand to be associated with. I’ve been here a long time, it is an exciting industry, and it is fantastic. One of my key objectives is to see how we can grow Nissan in Africa.
AAAM’s attraction to Nigeria
The government in Nigeria has already made a move to establish the foundation of the policy. Yes, there’s still work to be done to make it perfect but we all need to work together to refine the project. In the whole world, there are only two countries with a population of more than 100 million people that don’t have functional motor industry – Bangladesh and Nigeria. However, our choice is without doubt Nigeria. Obviously, if the Nigerian government feels it doesn’t need our support, we will go elsewhere, but we are very happy they do want to work with us. But with the experience we have as global oriented firms, we can bring global best practices to Nigeria.
Without mincing words, our meeting far exceeded our expectations. As an industry, we felt the African motor industry, particularly Nigeria, is critical and by far, the market with the highest potential if we exclude South Africa. The government and notable stakeholders, a number of years ago between 1990 and 2014, took a bold step in terms of introducing the auto policy. Although the industry has not moved at the speed everyone would have liked owing to a lot of challenges with implementation, coming together as an auto industry, we formed this association, African Association of Automobile Manufacturers (AAAM), with Jeff Nemeth (of Ford South Africa) as the President and the objective is to work with governments in Africa who have interest in establishing their auto industry.
So our number one priority was to offer our support to the Nigerian government to develop a sustainable auto industry. A sustainable auto industry has many facets to it – the first aspect is to build a legislative framework that allows stability and gives certainty to distance over a long period of time. The other aspect is that no one is going to invest in a market unless it is of a reasonable size. If one looks at the Nigerian market, 800,000 vehicles were imported plus or minus last year of which only 40,000 were new vehicles with grey imports or parallel imports. The size of the market can only grow if we can offer affordable solution. Affordable solution doesn’t only mean cheap car but we have to find ways of creating access to finance for people to be able to buy cars. If you are lucky you would get vehicle finance at 24 per cent in Nigeria, and quite frankly, at 24 per cent, you can’t do finance scheme.
AAAM delegation’s evaluation of Nigeria’s potential
I think the time has never been better for us to see how we can work together with industry parties in Nigeria to develop a sustainable motor industry. In South Africa, the auto industry creates sustainable jobs and employs directly more than 83,000 people and that is the result of many decades of work. We have to make it start in Nigeria. The potential is massive with more than 170 million people and over 350 million ECOWAS population, no one expects you to build an industry over night.
However, there is potential if everyone can work together. I believe Nigeria could certainly become, in 20 years’ time, a major force in the auto industry. Sustainability is the key. It should not be a short-term project. We all are going to focus on industrialisation and diversification.
NADDC’s N7.5bn loan for locally assembled autos
That is one of the outputs of what we have been working on for a long time. But in addition to that, there needs to be a clear definition of who is the manufacturer. Today, Nigeria has 41 registered motor manufacturers while in South Africa we have seven. What is important here is that the Nigerian manufacturers have to be part of the long term plan to ultimately move to what we call CKD (completely knocked down) manufacturing. You cannot move to CKD unless you start establishing a proper and reasonably-sized market. First, the policy must be right as in total market through vehicle finance and affordability and thirdly, the policy needs a very clear definition such that SKD (semi-knocked down) is SKD, and CKD is CKD, and those who are registered as manufacturers are truly manufacturers. That, to me, is very important.
President Buhari’s disposition towards NAIDP
He is very positive. He is a man who certainly understands what is needed. He has an excellent overview of the challenges that exist. It is not easy and would never be easy to resolve used car issue. It is not something that can happen overnight until you resolve the affordability concern. He is decisive and has good understanding of the industry and very importantly, all the government leaders we interacted with have a good knowledge of the business.
Addressing local content devt
As it is, there is no downstream. We have always deliberated on the local content issue and that was why we had with us as part of the delegation that met President Buhari the President of the South African Component Manufacturers Association. As manufacturers, we fully understand we can’t establish a sustainable modern industry without component manufacturers. So, in the very early days as we developed the programme with Nigerian stakeholders, we realised components and part suppliers are key stakeholders we need to bring along. We are aware of it and we are working on it.
Nissan S’Africa’s partnership with Stallion Nigeria
Without doubt, we are not disappointed, but we are obviously frustrated because things haven’t moved as we would have liked to see them move. This isn’t due to policy but lack of foreign currency. But having done business in many developing countries, we realise you don’t go into any country and expect a short-term success. We believe from the Nissan perspective that we are moving forward as planned but we will like to see it move much faster. However, we are still very committed to the ultimate goal to have sustainable presence in Nigeria.
The best route is that we make vehicles in Nigeria within a very solid policy framework that is enforced and implemented.
Percentage of local market targeted
As a Nissan brand, we would like to be around 20 per cent of 400,000 units and not 40,000 as the current volume of new vehicle market is in Nigeria. Today, if you look at the vehicle market, it is very difficult to justify any real focus in investment in the market that is only 40,000 or thereabout. However, our focus is a long term approach. Everything we are doing in Nigeria today is because we have a long term faith.
We intend finding solution to affordability first, and you are aware of our Datsun brand even though it is still only available in the right-hand drive. Indeed, we recognise one element, that what we do need to bring to the market is affordable transport solution and surely we will.
Plans to introduce low-end products
The only simple reason right now is that the NP200 half-ton pick-up truck is only available in right-hand drive. But, one of the options we are working on is how to get the left-hand drive. Two, we are addressing the affordability issue too and remember we also have the NP300. Very soon we will be launching globally the new Navara – a very fanciful and convenient pick-up truck for everyday and special purpose use. It is the latest pick-up from the Nissan stable. We believe there’s still a very strong role for a good, solid, affordable and reliable pick-up in Africa. So, both the NP200 and NP300 you saw at the Nissan South Africa factory are going to be carried on with.
Import of grey (parallel) and used vehicles
The Nigerian government understands that to get real growth in the auto market, you need to address the used vehicle market, but in the same token, there is also responsibility to ensure that the Nigerian population can get affordable vehicles, so to stop used vehicles and not instantaneously offer solution for an alternative wouldn’t make any sense. So part of the objectives of the task team is how to work on that transition. For us, the competition to new vehicle is not the five or six-year old vehicles coming to Nigeria or one year old or parallel imports. These are the things that do need to be stopped but fundamentally, you can’t stop it without an alternative solution and that is what we are going to work on.
Nissan under Whitfield
I think business has become a lot more serious and lot more sophisticated. The principles have not changed from a business perspective. One thing that has definitely changed is the price of our half ton pickup. When I joined, I think it was about R3000 ($208.795) or R4000 ($278.471). Today, it is well in excess of R100,000 ($6,962.59), which just gives you an indication of inflation.
But probably, the biggest change I have seen, if I look at it from a South African point of view, is that historically the auto industry in South Africa was very much focused on supplying demand in South Africa, with very high levels of protection.
That has progressively come down to current duty levels ranging between 18 per cent and 25 per cent, which has meant we have got to become a lot more competitive if we are going to grow this manufacturing base to what is an intention of getting to a million units in the future.
So the biggest change, I think, is that we have seen protectionism drop, which is a good thing because it does force us to become competitive and productive, and opened up the opportunities, which many manufacturers, including ourselves, are taking advantage of in terms of using this as a production base to export not only into Africa but other parts of the world.