High Inflation Forces Car Imports to Drop, Dealers Complain About Low Sales
- The value of car imports has seen a sharp decline, despite the increase in the unit price of the cars
- NBS foreign trade report shows that the value of imported vehicles dropped by 14% in 2024
- Stakeholders have identified the reasons behind the drop in imports and low sales
Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.
Car imports into Nigeria have shrunk in 2024 amid multiple challenges, including naira devaluation and high inflation.
The multiple challenges pushed costs of vehicle imports up, and according to the foreign trade report recently released by the National Bureau of Statistics, the total value of passenger car imports fell from N1.47 trillion in 2023 to N1.26tn in 2024, a 14.3% drop.
This is a sharp deviation from the previous year’s report, when vehicle imports doubled between 2022 and 2023.
Source: Getty Images
High inflation forces Nigerians to reprioritise
In 2024, Nigeria recorded its worst inflation year, with headline inflation closing the year at 34.8% and food inflation at 39.4% by December 2024.
This was the highest ever recorded in nearly three decades. The 2024 average headline inflation at 33.2% was also a sharp spike from the 24.7% average inflation recorded in 2023.
In the face of the cost of living crisis that emerged, Nigerian consumers were forced to prioritise essentials, and non-essentials like imported cars ended up at the bottom of the list.
With less purchasing power, high-value goods and other luxury items became less accessible and affordable to the Nigerian populace, the PUNCH reports.
Car import history in Nigeria
The NBS statistics show that in 2020, Nigeria imported vehicles valued at N546.79 billion, and the figure increased slightly to N695.40 billion in 2021.
It declined slightly in 2022 to N655.69 billion, and by the next year, it more than doubled to become N1.47 trillion.
The economic realities in 2024 saw the decline to N1.26 trillion, despite the increase in unit prices of imported cars.
Recall that the 40.9% depreciation of the naira over the year, from N1,215/$1 at the end of 2023 to N1,660/$1 at the end of 2024, also impacted the price of the imported vehicles, increasing costs for importers.
Low sales do not encourage one to import
A car dealer, Mr. Knorac Ifeanyi, who spoke to Legit.ng said that car sales slowed down in 2024. He said;
"Car sales is not as frequent as before. People are prioritising food and other necessities. If you import a car now, it takes you longer to sell it off, sometimes months. Some people don't even want imported cars anymore because its cheaper for them to just look for a Nigerian-used car and buy."
With the slow sales and customers opting for cheaper options, the turnover time is longer, and the importers are not able to buy more cars like before, he explained.
Source: Getty Images
The General Manager of PTML, Mr Tunde Keshinro, had earlier explained that the increase in import levies affected the drop in car imports.
Comparing the import of 45,000 units of cars in H1, 2023, to an import of 18,000 units for H1, 2024, he showed how the high import duties and taxes on used vehicles led to higher unit costs, thus lowering overall imports.
FG moves to stop used car imports
In related news, Legit.ng reported that a major industry shakeup is about to hit the automobile industry in Nigeria.
The government has moved against used car imports, emphasizing that Nigeria is not a dumping ground for all sorts of vehicles.
The government also has a lineup of plans to encourage the local production and assembling of cars in Nigeria.
PAY ATTENTION: Сheck out news that is picked exactly for YOU ➡️ find the “Recommended for you” block on the home page and enjoy!
Source: Legit.ng
