Why are affordable cars hard to find now? We are sure most people have been wondering how to answer this question, but don’t wonder—we gave the answer and solution to this problem.
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Car prices have been on the rise since the advent of the coronavirus pandemic, and the year 2020 brought about a revolution in the automotive industry because we saw a greater increase in the purchase of electric and hybrid vehicles than ever before. We are all aware of the reason for that: to avoid the harsh fuel surge and, in a way, improve the environment.
In more developed countries like the US and the UK, there are provisions for tax exemptions for these electric vehicles, but in Nigeria, this isn’t the case. The reason for this is that electric vehicles are very expensive and it is hard to find used ones that are affordable; going for hybrid cars would be the solution.
The matter remains that with the increase in sales of EVs, one would think that the price of gasoline-powered engines would decrease, but this isn’t the case. Buying a new or used car has been very difficult because of their high prices; even the Toyotas and Hondas, which are known as the most affordable cars in the worldwide auto market, were affected.
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A Toyota Corolla that easily sold for N1,800,000 is now selling for N2,500,000. Most buyers would be scratching their heads trying to find a way to get the price beat down, but the seller might not relent, and in actuality, we cannot blame them; these are the reasons finding an affordable car is so difficult.
Inflation
This is no hard fastball; everyone around the world is aware inflation in most countries is the order of the day, and Nigeria is no exception. What causes this deep-rooted and never-ending inflation in Nigeria? The answer isn’t far-fetched; we have a very low purchasing power, and our naira continues to be devalued in the foreign exchange market. The naira’s exchange rate against the dollar keeps increasing and doesn’t want to fall in favour of the naira. How does it affect car prices? Most of our cars are gotten and imported from foreign countries such as the US and given a scenario where a car costs £15,000 or more and is being imported into Nigeria, cumulative of the import duties and taxes when it is converted to naira using the N744 rate to the dollar, you might be paying over N11,000,000, and this price is probably for a used car and not an old one. In a bid to increase the purchasing power of the naira, the CBN (Central Bank of Nigeria) has introduced a number of policies to help achieve this, and we can all say that they haven’t ordinarily changed things as regards car prices in the country.
Prices Are Not Standard
Most cars have their MSRP (manufacturer’s suggested retail price), which is to be used as a reference to the price a particular car is meant to be, but it isn’t the main price as it is. What this means is that dealerships are left to their discretion on how much they attach to the price; it can be a little lower than the MSRP, but like in most cases, it is much higher than the MSRP. This disparity in putting up and standardising the pricing tag on cars is one of the reasons why cars seem to be more affordable now.
Many sellers come up with prices that work for them, especially since there is no regulation of how much the price of a particular item can be inflated. Especially when buying a used car, the real value of the car doesn’t always correspond to the price the seller names for it; as long as they deem it reasonable to them, the buyer is left to pay if they want to. This ultimately leads to issues when dealerships use this MSRP as a spectrum on how to fix their pricing, and if it is corrected, they point you to it and arguments cannot be made. This creates a loophole in prices, and a buyer who doesn’t do extensive research might be left with no choice but to pay the price.
Fewer vehicles available
Despite growing demand, the production of vehicles is still sluggish. There are fewer vehicles for sale, and many people aren’t getting rid of their used cars.
Due to limited production and availability, private sellers and dealerships are actively hunting for additional vehicles to add to their inventories, in addition to buyers who are actively looking for cars. Prices have increased dramatically as a result of more buyers competing for fewer cars. As any basic economist knows, if demand rises and supply falls, prices will invariably rise, and this is what is happening across the globe.
How to buy a car in the current economic climate
Despite the fact that used car prices are at a record high, it is still possible to purchase a car for a fair price. It’s crucial to purchase a car that matches your budget, regardless of whether you’ve bought a car before or not. You can set yourself up for success by being methodical in your planning and patience.
The following advice will help you purchase a car in the current economic climate:
- Intensify your search
These days, it’s difficult to get everything you want in a car in a handy location. Check with shops or individual vendors farther from your house. If you can find a better offer, it might be worth the extra time to travel.
Remember that it’s wise to browse around at various dealerships, especially during the best car-buying seasons.
Don’t forget to take similar options for the automobile model you want to purchase into account as you broaden your search by area. It could take months before you locate a good deal on the particular car you’re looking for due to the restricted supply.
- Use the value of your used car.
Although the cost of new cars has gone up, the value of used cars has also gone up. You should sell your used car right away if you no longer need it.
Consider taking advantage of the seller’s edge in the market to increase your earnings. When demand is high, selling your car could bring in a lot more money.
Will car prices ever go down?
Several analysts concur that as long as global inflation rates keep rising, vehicle affordability will remain a problem. While costs are still high, keep our advice in mind while making any future automobile purchases.
As new cars are created and released onto the market, old car prices should eventually decline. The greatest thing you can do, though, is to wait patiently for the ideal moment to buy an automobile.
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