CHAPTER ONE

INTRODUCTION

1. BACKGROUND OF THE STUDY

The history of Automobile in Nigeria started earlier before Nigeria as a country had her independence in 1960. The western world introduced the use of automobile to Nigeria when oil was booming in the 70s. Six automobile assembly plants were established in Nigeria between 1970 and 1980 by developed nations such as the United States, France, Germany, and Britain. These plants were established through partnerships with the Nigerian government and the issuance of licenses for operation and control policies. The plants were named Peugeot Automobile Nigeria Limited (PAN) in Kaduna in 1975, Volkswagen of Nigeria Limited (VWON) in Lagos in 1978, Anambra Motor Manufacturing Limited peugeot automobile Nigeria in Emene, Enugu (1980), Steyr Nigeria Limited in Bauchi, National Truck Manufacturers (NTM) Kano Fiat Production, and LeyLand Nigeria Limited (LNL) in Ibadan (Akiagwe 2010). Nigeria saw rapid progress following the construction of a six-automobile manufacturing factory. "The automobile industry is an engine of growth and stimulus to other economic activities like creating of employment opportunities growth of other satellite industries enhancement of technology transfer of skill acquisition," according to Aganga (2013), the minister of trade and investment. Refined petroleum products are easily transmitted from the place of production to fuel filling stations, which has greatly helped the nation's economy since the founding of the six automobile industries.

        The Nigerian motor vehicle assembly and fabricated metal product subsector was born with great potentials and resounding expectations. There is actual fire coming for this subsector. Numerous things continue to bother it. Among these is the problem of collapsed capacity utilization, which results in plants running at reduced capacity. This underutilization resulted from high production costs, a contracting market, slowed industry expansion, and unrestrained or unregulated competition from newly constructed, completely assembled metal items and pre-owned automobiles. Nigeria's existing population and economic situation may make the country's automobile industry appealing to foreign automakers. The market share of domestic plants decreased from 66% in 1988 to 30% in 1991 as a result of the capacity plants' poor performance in recent times. This decline was caused by the unfavorable economic conditions that resulted in a decline in the supply of new cars of all sorts in 1982. Other factors that have hindered this include the government's and Nigerians' lack of support, the absence of a dependable supplier network, consumer demand for locally produced goods, an unfavorable operating environment, a lack of industry expertise and technical skills to design individual parts or assemble vehicles, a weak capital base, subpar performance from local content suppliers, and outdated technology. Another major factor is the lack of political drive by the government of the nation to develop the motor vehicle subsector. In the face of declining local production, local demand has been met almost exclusively through imports. The sector is unable to compete. The Nigerian automotive industry has seen several hardships. Nigerian automobile industries are mostly focused on policy. In order to protect and acquire cars manufactured in Nigeria, the government passed a regulation in 1994 stating that all cars must be purchased domestically, unless the vehicle is not available elsewhere.

The government established this law to help support and defend indigenous automobile industries, but this law has been strapped aside by government itself. Foreign made automobiles are being bought by the Nigeria government rather than patronizing the ones produced locally. Many years later, the government still shows no interest in helping its citizens advance their technological skills. The government believes that Nigeria's natural resources—crude oil, essentially—will be enough to weather any economic hardship, but previous leaders of the country have squandered the country's reserves by siphoning off funds abroad, erecting buildings, and constructing homes rather than investing in local businesses that will boost output and provide a wealth of employment opportunities for their people. Dr. Oscar Odiboh, who is a consultant in the automobile sector, specified that all technologically advanced economies of a country only rest on a working automotive organization (Bisiriyu, R., 2012).

1.2 STATEMENT OF THE PROBLEM

Since in the year 2000, it has been recorded that there is a decline in the production of Automobile, some of the Automobile industries that were established between 70s and 80s are no longer in operation, as a result of challenges that has befall them. About 75% existing Automobile companies in Nigeria today deal only on car sales, about 80% of Automobile used in the country today are fairly used cars popularly known as Tokumbo (Okuhu 2011), because of the decline in Automobile production in Nigeria. It is very pertinent that this study will look into some of the challenges facing Automobile industries in Nigeria. Also find possible solution on how some of these challenges can be solved to enhance production.

In Nigeria, when you purchase a brand firsthand vehicle, the interest rate is actually much; buying a vehicle in Nigeria is actually expensive, such that persons from the average class in Nigeria cannot afford to acquire a vehicle of their choice. This is as a result of cost facing these auto companies in manufacturing these automobiles. Russia and India try to significantly cut interest amount on loan for vehicle purchase by 5% when acquiring cars, to encourage their domestic industries by significantly cutting tariff meant for quota of automotive sectors. The fee and upkeep of automobile vehicles in Nigeria is expensive due to the state of the economy. Being a car owner is quiet a huge feat in Nigeria. Someone who purchases a car in Nigeria is seen as a clue that suffering has been eradicated. Buying of an automobile and a house is celebrated with great joy which is seen almost equally as the birth of a boy in a typical Nigerian Family. It is to this regard the study is based on a postmortem analysis of the declined productivity of the automotive industry in Nigeria

1.3 AIM AND OBJECTIVES OF THE STUDY

The study seeks to carry out a postmortem analysis of the declined productivity of the automotive industry in Nigeria. The objectives of the study are:

1. To evaluate the performance of peugeot automobile Nigeria from time of inception till date
2. To determine the cause of declined productivity in peugeot automobile Nigeria
3. To ascertain whether the peugeot automobile Nigeria is still in production
4. To determine the factors affecting the productivity in peugeot automobile Nigeria
5. To recommend ways to improve productivity in peugeot automobile Nigeria

1.4 RESEARCH QUESTIONS

The research questions are:

1. How is the performance of peugeot automobile nigeria from time of inception till date?
2. What are the causes of declined productivity in peugeot automobile Nigeria?
3. Is the peugeot automobile Nigeria still in production?
4. What are the factors affecting the productivity in peugeot automobile Nigeria?
5. What are the ways to improve productivity in peugeot automobile Nigeria?

1.5 STATEMENT OF THE HYPOTHESIS

H0: the performance of peugeot automobile Nigeria has increased

H1: the performance of peugeot automobile Nigeria has decreased

1.6 SIGNIFICANCE OF THE STUDY

The following are the significance of this study:

1.     The outcome of this research will create awareness to both the general public and the automotive industry about the declined productivity of peugeot automobile Nigeria.

2.     This research will be a contribution to the body of literature in the area of the automotive industry about the declined productivity of peugeot automobile Nigeria, thereby constituting the empirical literature for future research in the subject area.

1.7 SCOPE OF THE STUDY

The study covers on a postmortem analysis of the declined productivity of the automotive industry in Nigeria with focus peugeot automobile Nigeria from time of inception till date

1.8 LIMITATION OF THE STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.9 DEFINITION OF TERMS

PRODUCTIVITY: Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production process, i.e. output per unit of input, typically over a specific period of time.

AUTOMOTIVE: The automotive industry comprises a wide range of companies and organizations involved in the design, development, manufacturing, marketing, selling, repairing, and modification of motor vehicles