How Increased Fuel Prices and FX Rates Will Influence Vehicle Purchases in Nigeria in 2024

• The current cost of fuel and FX rate in Nigeria will heavily impact vehicle purchases in the country this 2024.
• With this new development, many areas in the Nigerian Automobile Industry will be reshaped impacting how Nigerians purchase cars and the type of vehicles they go after.

The economy of every country has an impact on every form of business operation in the country. As such, with the current exchange rate in the country and the cost of fuel, certainly, a lot will be changing in the Nigerian Automobile industry.

While many Nigerians have not realized it, the surge in fuel prices has been reshaping the Nigerian Automobile industry since May 2023. However, with the continuous increase in the price of fuel, this change has continued, while also impacting the type of vehicle demand and need growing in the country. But, it’s important to note that this change is not yet done. In fact, in 2024, the increased fuel and FX rates will heavily influence the Nigerian Automobile industry, as well as vehicle purchases.

Given the current state of things in Nigeria, in this article, we will be highlighting the various ways increased fuel and FX rates will influence vehicle purchases in Nigeria this 2024.

How Increased Fuel Prices Will Impact Vehicle Purchases in Nigeria

Below, we’ll be taking a look at how the increased cost of fuel will impact how Nigerians purchase vehicles in 2024.

• Increased Demand for Fuel-Efficient Vehicles

While fuel efficiency has been critical to any vehicle’s performance, its importance has increased even more in Nigeria, following the over 200% increase in the price of fuel. With this, many Nigerians who cannot afford to spend a huge amount of weekly fuel purchases will want to lean towards purchasing fuel-efficient cars. 

Now, car dealers in Nigeria will get more buyers requesting fuel-efficient cars even more than they used to. Many Nigerians are also going to place a benchmark on a certain MPG level they expect their newly purchased cars to come with.

• Return to the Supremacy of Sedan Cars

Didn’t we almost think that sedan cars would gradually be erased from the automobile industry when SUVs started increasing in popularity? But, that seems to be changing in Nigeria in 2024, even though in many other countries, SUVs are reigning supreme.

There’s an expected increase in demand for sedan cars in Nigeria in 2024. Why? Because sedan cars are known to have better fuel economy compared to SUVs, many Nigerians are set to take advantage of that. After all, to the average Nigerian, what they want is a vehicle that can take them to and from their location, and if using a sedan will help them maximize their fuel usage and still meet their need, then trust they will go for sedans.

• Popularity of Electric Vehicles

Of course, there’s going to be an increased trend of Electric Vehicles in Nigeria in 2024, especially among wealthy Nigerians who can afford these vehicles. Many more Nigerian car dealers are going to be marketing more EVs, with the hope of attracting the wealthy Nigerian class who can afford to purchase these vehicles. What does this mean? The popularity of EVs like those of Changan and Tesla and their likes will dominate in Nigeria in 2024.

The Director of the National Automotive Design and Development Council (NADDC) noted in a recent publication that by 2025, 30 per cent of passenger cars driven in Nigeria will be electric-powered.

What does this mean? It suggests that as the year progresses, more people will shift from using petrol-powered engine cars to electric ones.

• Increased Popularity of Hybrid Vehicles

While EVs will gain even more popularity in Nigeria this 2024, Hybrid vehicles will have greater demand from Nigerians looking to purchase new vehicles. Why? Hybrids are a good bridge between gas-powered cars and EVs and the average Nigerian will prefer to purchase a Hybrid because it gives them a good balance of reducing their fuel consumption and taking advantage of the electric vehicle lifestyle.

How Increased FX Rate Will Influence Car Purchases in Nigeria

As a result of the high FX rate, prices of cars have increased drastically in Nigeria. The high cost of buying new or used vehicles in Nigeria leaves more people with no choice other than to keep the ones they have longer than usual. 

Today, many individuals, families, and companies that formerly upgraded or changed their cars every four years now decide to keep their older cars for as long as they can, while some keep theirs for over nine years due to the large amount needed to buy cars in Nigeria today.

Business Day reports that this will continue even in 2024 as inflation and prices continue to surge. Therefore, many will continue to invest their limited resources into basic needs rather than buy new cars.

Here are other ways the FX rate will influence car purchases in Nigeria:

• Demand for Nigerian Used Cars

With the high cost of importing cars into Nigeria, many Nigerian dealers and buyers will be forced to incorporate Nigerian used cars into their dealership as well as their purchases. Many Nigerian buyers will embrace buying decently used Nigerian vehicles because the prices are subsidized compared to their counterparts imported from other countries.

• More Purchases of Nigerian-Made Cars

While this is already a prediction, it can be seen that Nigerian-made cars will grow in popularity in 2024. As many Nigerians will find the prices of Tokunbo vehicles expensive, many people will be encouraged to go ahead with purchasing brand-new Nigerian-made cars.

Conclusion

It’s undeniable that the increased price of fuel and FX rate will impact car purchases in Nigeria in 2024. There’s no telling how this will improve over the years, but in 2024, many Nigerians will want more fuel-efficient cars and consider buying Nigerian-made vehicles.