Nigerians imported foreign used cars worth N169.1 billion in the first half of 2022. This represents a 51.2% decline from the N346.29 billion recorded in the corresponding period of 2021 and a 37.7% decrease from the N271.2 billion spent in the second half of last year.
Also, Nigerians imported motorcycles and cycles valued at N122.39 billion between January and June 2022, 31.1% lower than the previous period (N177.6 billion – H2 2021).
This is according to a breakdown of Nigeria’s international trade data released by the National Bureau of Statistics (NBS).
Nigeria’s vehicular imports (especially used cars) have recently been declining as dealers across the country fault the falling value of the local currency, lack of FX, and high cost of clearing at the ports, amongst other factors.
The latest NBS figures show that Nigeria’s car imports fell to the lowest levels since the first half of 2018 when Nigerians spent N59.1 billion on used cars. The same trend applies to the importation of motorcycles and cycles in the country.
Due to the surging cost of importing foreign used vehicles, Nairametrics reports dealers have reduced their orders even as the cost per unit of the vehicles has increased by almost 50% in the space of one year. According to findings by Nairametrics Research, a Toyota Camry 2007 to 2009 model that was sold for an average of N3.3 million last year has increased to a minimum of N4.1 million.
- Also, a Lexus ES 350 (2007 to 2013 model) now costs an average of N5.3 million. It was sold for an average of N3.5 million as of this time last year. In the same vein, the price of a Toyota Corolla increased from N2 million to over N3.5 million.
- Car dealers in the country have attributed the surge in the price of foreign used cars to the increase in the fees associated with clearing the cars from the ports as well as the significant depreciation in the exchange rate.
- On the other hand, the ban on the movement of motorcycles in most local governments in the Lagos metropolis has also seen the rate of motorcycle sale record a significant decline in recent months, according to findings.
Car dealers scrambling for FX at a higher rate
- As a result of the sustained scarcity of foreign exchange in the country, car dealers have been forced to scramble for USD at higher rates on the black market. The exchange rate between the naira and the USD has been on a nosedive, following various actions by the CBN in recent times, including the plan to redesign the N200, N500, and N1,000 denominations.
- The naira, which started the year at an average of N565 against the US dollar, has fallen to as low as N820/$1 bedevilled by actions of currency hoarders, speculative-induced demand, high demand for foreign education, as well as a decline in FX inflows. This means that car dealers now pay high naira value for the same value of cars.
- Nigerian car dealers have noted that they convert their naira for as high as N840/$1 at the black market, which in turn reflects in the selling price of the cars.
- It is also worth noting that there is global inflation already at play, a consequence of the Russia-Ukraine war. This has also contributed to the surge in cost.
Although car dealers are disgruntled about the rise in the cost of clearing vehicles from the ports, it should be recalled that the federal government had, earlier in the year, reduced import duties on used and new vehicles from 35% to 15% and 20%, respectively.
In the meantime, as market players continue to fear a further decline in the value of the naira, car dealers and Nigerian car lovers may need to brace themselves for a further hike in the cost of foreign cars.