Prices of used cars assembled between 2016 and 2017 have jumped by up to ₦6 million in the past four months driven by the weaker naira against the dollar.
In Nigeria, owning a car is regarded as a luxury that is often out of reach for the average citizen. The cost of new cars is exorbitant, and the local automotive industry is unable to meet the demand. As a result, buyers increasingly turn to imported and used vehicles known locally as ‘tokunbo’, which loosely means ‘from overseas’ in the Yoruba language.
Tokunbo cars are mostly imported from Europe, and the United States and are often cheaper than new cars, serving as a good option for people looking for affordable vehicles.
Nigeria is said to be the third-highest importer of used vehicles from the US, behind the United Arab Emirates (UAE), and China.
The price of a new Mercedes C-Class has surged, with a used unit now being sold for ₦36 million as compared to ₦30 million in September last year. The price increase is due to the fluctuation in the exchange rate of the naira to the dollar. During this period, the naira’s market exchange rate to the dollar was ₦1,484.563, which caused the price of most vehicles to increase.
The increase in import duties has had a significant impact on the pricing of most vehicles in Nigeria. The Federal Government has raised the exchange rate of customs to hike up import duties and duties payable on imported goods at Nigerian ports. As a result, the cost of cargo clearance has gone up, affecting the prices of imported vehicles.
The PUNCH reports that the exchange rate for payment of duty paid on imported vehicles on the portal of the Nigeria Customs Service was raised from N783/$ to N952/$ on Thursday. This became the fourth time the exchange rate for cargo clearance was raised this year. The CBN had in June, adjusted the exchange rate from N422.30/$1 to N589/$1. In July, it was adjusted to N770.88/$1, while in November, it was adjusted to N783.174/$1.
Car models with low engine capacity such as Toyota Corolla and Honda Civic, which have over the years been popular due to low prices and fuel efficiency, have also recorded significant price increments in the period.
The Naira has been declining since 2020, directly affecting prices of imported goods especially used cars and petroleum products in the country.
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