Nigeria’s passenger car imports fell by 14.2% in 2024 due to unstable exchange rates and rising inflation, totaling N1.26 trillion. The naira’s depreciation and higher customs duties contributed to increased vehicle costs, leading consumers to gravitate towards locally made cars. This economic shift has notably decreased car sales, highlighting a growing divide in the consumer market.
In 2024, Nigeria experienced a notable decline in passenger car imports, attributed to volatile foreign exchange rates and rising inflation. Reports indicated a 14.2 percent decrease in car imports, totaling N1.26 trillion compared to N1.47 trillion in 2023. This downturn reflects the challenges faced in the currency market, with the naira depreciating significantly despite growth in external reserves.
The Central Bank of Nigeria reported a stark depreciation of the naira, with the dollar costing N1,535 on December 31, 2024, a rise from N997 a year earlier. Kelechi Achilike, a car dealer, highlighted the impact of these economic changes on customs duties, which have reportedly quadrupled, significantly raising the cost of importing vehicles.
Achilike noted that the rising costs have made foreign vehicles prohibitively expensive, thereby stimulating a shift among consumers towards locally produced cars, which offer a cost-effective alternative. However, some individuals still prefer imported vehicles, believing them to be of superior quality.
The decline in car sales has been severe, with Achilike reporting a drop from selling nearly ten cars per week to only two per month. The middle class appears to have diminished, with car purchases now predominantly made by affluent individuals or those in government roles, as many consumers lack the financial means to afford vehicles.
The decrease in Nigeria’s passenger car imports in 2024 is primarily due to unfavorable economic conditions, including the depreciation of the naira and rising inflation. The substantial increase in customs duties further compounds the challenges faced by both dealers and consumers. As a result, there is a notable shift towards locally manufactured vehicles among consumers seeking affordability, coupled with a stark reduction in overall car sales. The purchasing landscape reflects a widening gap between the wealthy and the less affluent, reducing the market for mid-range vehicles.
Original Source: businessday.ng
