In 2024, Nigeria’s passenger car imports fell 14.2% to N1.26 trillion, driven by currency instability and inflation. The naira depreciated 40.9% against the dollar, complicating the import landscape as customs duties rose significantly. The market shift reflects reduced sales and changing consumer preferences for local vehicles amid an economic divide.
In 2024, Nigeria saw a notable decline in passenger car imports, which fell by 14.2% to N1.26 trillion from N1.47 trillion in 2023. The decrease has been primarily driven by unpredictable exchange rate fluctuations and surging inflation levels. BusinessDay’s analysis highlights that the naira depreciated significantly, losing 40.9% of its value against the dollar in the official market, despite an increase in external reserves.
The Central Bank of Nigeria reported that as of December 31, 2024, the dollar was valued at N1,535, escalating from N997 on December 31, 2023. These currency challenges illustrate the persistent difficulties faced within Nigeria’s foreign exchange market, despite ongoing efforts to stabilize it. Kelechi Achilike, a car dealer, noted that customs duties have also skyrocketed, now quadrupling from previous rates, impacting overall vehicle prices skewed further by import costs.
According to Achilike, the increased cost of customs has led to exorbitant pricing for cars, making them unaffordable for the typical consumer. He cited that a 2004 Toyota Corolla, which previously would have sold for around N480,000 (customs duty included), now fetches up to N8 million, leading potential buyers to exit the market entirely. This economic pressure has prompted a shift toward locally manufactured vehicles, which are often seen as more economical alternatives.
Achilike reflected on his declining sales, noting that he now sells only two cars per month, compared to nearly ten before the economic downturn. He attributed this shift to the disappearance of the middle class, stating that buyers are now primarily wealthy individuals or government officials, leaving the lower-income group without options for car purchases. He expressed concern that the market is losing a significant segment of potential buyers, exacerbating the economic divide.
The decline in Nigeria’s passenger car imports in 2024 is primarily due to severe currency devaluation and rising inflation, further complicated by quadrupled customs duties. This situation has shifted consumer preferences toward locally made vehicles due to affordability issues, while also revealing the shrinking middle class. The automotive market is now largely populated by affluent buyers, heightening socioeconomic disparities.
Original Source: businessday.ng
