The Head of Technical Services at Cars45, Damilola Ojurongbe, has declared that the foreign exchange crisis in Nigeria has led to increased prices for foreign-used cars, resulting in a reduction in demand as individuals seek more affordable options.
The shift, he said, had benefited Nigerian used cars, particularly Japanese brands like Toyota and Honda, which had experienced a surge in demand.
He cited a report indicating that the Nigerian used-car market was now valued at over $1.4bn and expected to grow significantly by the end of 2024.
He said the trend underscored the impact of the forex crisis on consumer preferences within the Nigerian automotive market, with a noticeable shift away from foreign used cars towards more affordable domestic options.
Ojurongbe stated, “We have been witnessing a steady rise in rates over the years, with the FX crisis impacting all car categories, especially foreign used cars due to their ties to exchange rates.
“This unpredictability has led dealers to pass on costs to clients, causing a surge in demand and prices for Nigerian used cars,” he stated.
He said that recent developments in import tariffs, taxation, and regulatory policies were reshaping the landscape of Nigeria’s automotive market.
According to Ojurongbe, the Nigerian Customs Service started using black market rates for clearing, until the recent intervention by the Central Bank of Nigeria.
He, however, expressed optimism that the proposed automation of the clearing process at ports in 2023 was expected to have a direct impact on vehicle prices, influencing consumer preferences and purchasing behaviour.
Furthermore, Ojurongbe said that the recent removal of subsidies, particularly on gasoline, was causing a ripple effect in the market.
He said with the increased petrol costs, consumers are reevaluating their vehicle choices, favouring options that offer better fuel efficiency.
According to Ojurongbe, the shift in demand is notably boosting interest in hybrid cars, which are renowned for their ability to maximise fuel economy.
The value of Nigeria’s used vehicle imports increased from N325.05bn in 2022 to N1.063tn in 2023, representing a 226.46 per cent increase over one year, according to the 2023 National Bureau of Statistics foreign trade report.
This surge amounted to a staggering N736bn jump compared to the previous year’s figures.
