When did you transit from motorcycles to vehicles, and what motivated you to enter into the energy transition process by championing the production of electric vehicles, CNG and LNG-powered vehicles?
My vehicle manufacturing factory is about 12 to 13 years old today. I diversified into producing CNG vehicles two years ago when I knew that someday soon, the fuel price would go up. I knew right from the beginning that the government was going to remove the subsidy which would eventually increase the pump prices of fuel.
So, I started planning by buying the equipment. That was why I was able to produce so many units immediately the fuel subsidy was removed by the government. If you go to places like Benin, 80 per cent of the vehicles they are using are CNG-powered. They have tested CNG and it’s working very fine for them over there. So, I believe that in the nearest future, all Nigerians will embrace CNG vehicles, because they are not just very affordable, but using them also leads to low maintenance costs.
That was why I started the production in time, in fact, before everybody, and we are doing well. Now, we are converting petrol/diesel vehicles for people that are using our own {Innoson} vehicles. After some time, when our own vehicles have been covered, we can then start converting vehicles people who own or use other brands.
What partnership do you have with the government since it removed fuel subsidy?
I knew that if the pump prices of petrol and diesel go so high up, everybody would switch to CNG. That was my own thinking before I started to develop CNG vehicles. I knew it was the way forward. I knew that the government must eventually remove fuel subsidy.
Today, they have done it. And, it was a big surprise to many that I started manufacturing the alternative CNG buses and cars even before the subsidy was removed. But, there is nothing there. It was just that I had the foresight to calculate what the fuel price would be in future; believing that when the pump price goes too high up, the alternative would be CNG and LNG vehicles.
So, I went straight and started producing CNG vehicles. Now, I make vehicles that can use CNG and petrol or diesel. In some places, CNG is not available. In such situations, the alternative (petrol or diesel) can be serving them. When CNG is available everywhere, I will make all the engines to be CNG-powered only. For now we are doing engines that can be CNG, fuel or diesel-powered. The price is also very affordable.
The difference between CNG and the other types of fuel is very clear and far apart. So, today, following subsidy withdrawal, people no longer fuel their vehicles as they used to because of the harsh economic condition in the country. That is why I believe that if the government gives some kind of incentive to companies like Innoson, we can build CNG conversion centres everywhere in Nigeria, so that everybody can embrace CNG and enjoy the huge benefits.
What about the body of your vehicles? How much of the materials do you source outside and within?
What we are producing is the body of the vehicles. We still get the engines from the engine manufacturers. We don’t produce engines. While we get the engines from the makers, we produce other things needed to use. Even electronics, we get them from the makers. It is not that we produce everything 100 per cent in Nigeria. There are certain items that we must surely source for, but they are not much. We don’t have the capacity to do everything from A to Z. There are certain things we bring in.
How would you like the government to assist vehicle manufacturers?
The government has a role to play. Part of their role should be getting the environment okay for the manufacturers. They should give patronage which they are already doing. Government is trying their best because they cannot do everything. But I think that if they continue to do more, it will be better for Nigerians.
What is your projection for Innoson as an organisation in the next 10 years?
My projection is to see Innoson brand of vehicles everywhere you go in Africa. It is a projection for Nigerians and not for Innoson alone, because if you travel anywhere in the world and see Innoson Vehicle, you will know that it is made in Nigeria. It is our own and all Nigerians are supposed to support Innoson Vehicles.
Are you encouraged by the level of patronage?
Many Nigerians are using my vehicles. We have a lot of our CNG vehicles in Edo state and other places, and they are happy with their performance. I am encouraged. People are giving us a lot of support. Many people are no longer ready to buy imported vehicles anymore, except Innoson vehicles. They believe that if they continue to buy Innoson vehicles, the company will employ more Nigerians and people will be more secure in their jobs. Even though ours are not perfect, they prefer using it with the anticipation that after sometime, what is good will even be better. I believe our own is still good enough.
How affordable are vehicles manufactured by Innoson?
Nothing is very affordable today in Nigeria anymore. Even to eat in a canteen is no longer affordable. But I believe that Innoson vehicles are the most affordable in the country among vehicles of good quality. We have to protect our name by producing good quality. If you produce something that is not good, the factory will shut down because people won’t buy. We don’t compromise our quality.
Would you advise the government to stop importation so that your products can thrive?
I am not encouraging the government to ban importation. As far as we are producing good quality, I believe that our own will be better priced than the others. I am not afraid of competition, because I trust the quality of vehicles we are manufacturing. Nigerians deserve something that is good, and that is what we give them.
Are you using local talents or foreigners to produce in your plant?
Sometimes when we want to procure certain equipment, we need, we usually buy the manual {instead of the automated version} so as to employ more Nigerians to man them. It is not as if the automatic machines cannot work here, but we are conscious of the need to create jobs.
I buy manual so that more people can get involved in the production. There was a belt we were supposed to buy: We needed the automatic version, but we bought the manually operated one and that is the difference between my factory and others’.
Instead of using some automatic equipment, we use people to do the job. I am interested in having our people employed and kept busy. Keeping the young ones busy helps the society and it is very important. If the youths are not busy, there will be problems. So we are creating jobs to keep them busy. That is the way forward.
What are your expectations from government and the market generally?
I am not expecting the government to do much because what they are doing is okay. The most important thing is that everybody should patronise us. It is not only government that should be patronising us. We also expect ordinary Nigerians to patronise us. What I want is for the factory to be busy, because if the factory is not busy, our workers will begin to have the time to do the wrong things instead of working. At times, I engage them in production, not just to make profit, but to ensure that they are busy working.
Considering that the President specifically mentioned 20-seater CNG buses in his recent broadcast, does Innoson have the capacity to produce this and other types of buses on demand?
Any size of bus that Nigeria wants, we have the capacity to produce them here in Nnewi. We have the capacity to produce 120-seater, 20-seater or 10-seater bus model. The important thing is to give the customers what they want. We produce bus variants from seven- seater to 60-seater {the latter with provisions for standing passengers}. So, it all depends on what you want. We also produce cars, SUVs, and MPVs powered by CNG.
What about LNG because I have heard you talk about LNG in the past?
Some people need LNG {liquefied natural gas} vehicles and we are producing them. Whatever you want, whether CNG, LNG or even electric, we produce all of them here in Nnewi.
Has there been any kind of increase in patronage between when the fuel subsidy was removed and today?
Yes. Many people need CNG vehicles now, including individuals and government buyers. Many Nigerians are using my vehicles. We have a lot of our vehicles in Edo State and other places and it is serving them well and they are happy with then.
One important issue about CNG and LNG is the high cost of converting vehicles that are currently running on petrol and diesel.
The cost of conversion is very high now and before the cost can come down, the government has to intervene. Before the cost will come down, there is a need for an investment which requires government support. With such investment, the cost of conversion to CNG can be reduced to N300, 000.
But today, because such investments are not yet on ground, the cost of conversion is too high. If the government can put certain support facilities in place, the conversion will be reduced to about N300,000. At Innoson, we have something to do to reduce it to that price, but it requires government’s support. Again, there are certain things we are supposed to produce here because we have the materials. If we produce them here, the conversion cost will be N300,000. Without producing these vital materials here, the conversion cost will be like N800,000.
That investment is important.
What are you doing in terms of providing rechargeable components for the electric vehicles?
The solution to electric vehicles is the local production of the batteries here in Nigeria. Without producing the batteries locally, electric vehicles will remain expensive. First of all, we need investments in battery production. When we manufacture it here, the cost of electric vehicles will come down. Importing the batteries will make the vehicles expensive and nobody will like to budget 50 per cent of the vehicle cost to buy the battery alone. Instead, they will prefer to buy petrol or diesel-powered vehicles.
Don’t forget that after four years, electric vehicles users will have to change the batteries and buy new ones. Electric vehicles are good, but not yet for Africa, I don’t think it will go far for now. This is because when you buy an electric vehicle, a major component in the vehicle, like the battery, will no longer be usable after four years. The battery will die after four years, and most of them are like that. The solution is, therefore, local production of batteries.
Producing the batteries in Nigeria will considerably reduce the price, so that even when it is to be replaced every four years, it won’t impose a huge financial burden on the owner.
The best type of vehicle that suits the Nigerian situation today is the one powered by CNG. It will be better and cheaper when we produce the CNG {gas} bottles here. But if you import the bottles to use in manufacturing CNG vehicles, the price of the vehicle will be very high. When the gas bottles are imported, conversion from petrol/diesel to CNG will not be less than N800,000.
But producing the bottles here in Nigeria will crash the conversion cost to N300,000. To set up such an investment is very expensive.
That is why government needs to look into this challenge with a view to providing incentives, so that people will be able to convert their vehicles at cheaper costs.
How did you start the journey of what is known today as Innoson Group?
Innoson started small like many other business people, by first engaging in small-scale trading, and diversifying into the vehicle manufacturing industry later. I started by trading in motorcycle spare parts. From there, I moved on to selling motor spare parts. It was from motor spare parts that I went into motorcycle assembly in Nnewi, and then plastics manufacturing in Enugu, and so on.
Tell us a little bit of your family background
I grew up in Nnewi and I started my business in Nnewi. I am still at Nnewi. My father was a civil servant. He worked in PWD {Public Works Department} and retired meritoriously in 1978. He was not a businessman, but I had a brother, Chief Gabros Chukwuma, who was in business. He started with a medicine shop and that is where I grew up.
After some time, he sent me to go and learn trading in spare parts. From there, I joined the spare parts business. I started learning trading with my brother initially, but later, I started my own in 1980.
What were the initial challenges you encountered?
Challenges are an everyday occurrence. You must have challenges, but the important thing is to get over them. Anything that comes up in terms of challenges, we try to conquer it. Even today, we have challenges. What we do is to work hard to conquer the challenges, so that business will go on. Initially, I was buying motorcycle spare parts from people who had dealerships with Leventis, Boulos Enterprises, and Yamaco, before we started importing.
What were your reasons for importing the motorcycles?
In the course of trading in motorcycles, I had gathered much knowledge about the spare parts. I calculated what the business of motorcycles should be and I found out that the companies that were selling motorcycles then were selling them at higher prices than they were supposed to be selling them.
So, instead of importing fully built motorcycles, I tried to import them in pieces – that is by carefully packing the parts into the containers, only to assemble them on arrival at our base in Nnewi. By importing them in pieces, I was able to crash the price of brand new motorcycle in the market by 50 per cent. That was how I dropped the prices of motorcycles by importing them as parts, and coupling them at our assembly plant.
Before I joined the motorcycle business, there were only four companies dealing in motorcycles in Nigeria: Leventis was for Honda, Boulos Enterprises was doing Suzuki. Yamaco was for Yamaha and CFAO was representing Moblet and Kawasaki. So, the next one that came on board was Innoson which was doing for Jinxing and one other company. I brought in the motorcycles in pieces and started assembling them.
Before I joined the business, the price of a motorcycle in the market was about N150, 000, but when I did this, I crashed the first price to N80, 000 and later to N60, 000. It became half the price and everybody joined in doing the same thing. Before then, I had moved to establish a plastics company in Enugu to help in producing the components. This is because if you import the components without plastics, the container will contain more motorcycle parts.
Initially, before I came in, Leventis and others used to bring in 36 units of complete motorcycles in one 40-feet container. But when I started the innovation of importing the parts and assembling them in Nigeria, I was able to import 220 units in one container of the same size. And the price of one was slashed by half. When it was N150, 000, people preferred to go and buy second-hand motorcycles, because of the high price.
However, when I crashed the price, everyone started buying new motorcycles. That was how people abandoned tokunbo motorcycles and started buying new motorcycles till today. I am now doing the same thing in the automobile industry in Nigeria today. I am trying to bring the price of new vehicles down so that a common man will be able to drive a brand new vehicle. I defeated tokunbo in Nigeria.
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