So many concerns have been growing in the Nigerian automotive market for a long time now, and only recently, it’s been getting a lot worse as car dealers in Nigeria are finding it twice challenging to import used cars into the country due to importation.
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According to reports, this challenge is mostly due to the importation tariff related to the exchange rate and import logistics. Speaking to The PUNCH, car dealers in Lagos told the news publications that the growing scarcity of used cars in the country is due to the high exchange rate on import duties.
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Speaking to the publication, Olaniran Adelana, the State Secretary of the Lagos State Motor Dealers Association, stated: “The rate of dollars is making it difficult for us to purchase cars the way we used to buy them from Europe. And we are having challenges selling old stocks because of the frequent depreciation of the naira.”
He also noted that some car dealers in Nigeria have had to exit the market due to the fluctating Naira and the high import tariff.
Also speaking on the same matter, Chinonso Amaraiwu, the owner of Chimex Motors at Berger Car Mart said:
“Car sales are gradually picking up, but the major challenge now is how to replace the ones sold. Cars are no longer entering the country as it is used to because of the many challenges facing vehicle importation, ranging from the duty payable on imported cars to other challenges.
“The duty is discouraging a lot of importers from going into vehicle importation. Very soon, people will find it very difficult to buy cars, especially tokunbo vehicles, because they are no longer coming the way they used to come before now.”
Another car dealer identified as Chibueze who sells cars at Amuwo-Odofin stated:
“The high costs of importing tokunbo cars is associated with the exchange rate, For instance, you can sell your car at its current price of, say, N6m, and when you want to bring in the same car of the same year and model, you will find out that you can’t get it for that amount.”
It appears that the major challenge that many car dealers are faced with in Nigerian currently isn’t just the import tariff, but also the fact that the Naira continues to fluctate, making any sales on a car a potential loss on their part, when they return to repurchase the said vehicle. For car dealers in Nigeria, it’s a double-edged challenge, which is rapidly sending many of them out of the market, and in turn, causing a growin rate of Tokunbo cars scarcity. Does this mean Tokunbo cars could be going away from the Nigerian market? Far from it, but it seems the prices will continue to rise.
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