Nigeria’s foreign exchange volatility, high inflation rate and high import duties are pushing more people away from buying ‘Belgium’ cars to second hand cars, Blueprint can authoritatively reveal.
Findings showed that the volume of imported cars into Nigeria in 2024 was affected by economic challenges, including a foreign exchange crisis and high import duties.
The current exchange rate for the clearance of imported cargoes at seaports stands at N1, 512.21 per dollar, while the official exchange rate at the Nigerian Autonomous Foreign Exchange Market (NAFEM) is N1, 509.67.
Documents showed that in the first quarter of 2024, no used vehicles were imported into Nigeria compared to N69.23 billion worth of used vehicles imported in the same quarter in 2023.
Also, in the second quarter of 2024, the value of imported used vehicles was N138.62 billion, an 81.5 decline from the same quarter in 2023.
According to the Ports & Terminal Multipurpose Limited (PTML), in the first six months of 2024, vehicle importation witnessed a 60 per cent.
PTML handles 65 to 70 percent of the vehicles imported into the country.
The company said the drop was due to restriction of rebates on ex-factory prices used for assessing import duty to 10 years instead of the 12 years allowed by law. This restriction forces vehicles older than 10 years to pay higher import duties.
“For the period between January and June 2023, PTML terminal handled about 45,000 vehicle units, while in the same period in 2024, there was a significant reduction to less than 18,000 units,” our findings further revealed.
In a chat with Blueprint, a car dealer, Maxwell Musa said the economic situation was pushing more people to buy ‘good’ second hand cars rather than go for ‘Belgium’ cars as they were relatively cheaper and more pocket friendly.
With the dollar exchanging for N1, 660 as at 23rd December, 2024, Musa said, many car dealers have resorted to the second hand cars option to still remain in business.
He said: “The prices of ‘Belgium’ cars are very expensive now. Some people don’t even import cars again, they prefer to buy and resell second hand cars. If you go to the car stand, you will see a lot of second hand cars. It is only the big dealers that still keep Belgium cars because cars are very expensive at the moment.
“For instance, the Toyota Corolla that is mostly used for Uber, before now, people buy for between N2.5 to 3 million direct ‘Belgium’. But now, that car is like N7 to N8 million. Before, we were buying ‘Camry Muzzle’ for between N2.8 to N3 million.
“The 2013, 2014 model you could get it for N5 million, N5.5 million but now it is N13-N15 million. Even scrap cars sell for as much as N1million. To get a good, fairly used car that is still in good shape, you’ll need between N3 million to 4 million. Except if you see somebody that is in distress that wants to sell their car then there is a possibility of getting one for about N2.5 million.”
The car dealer stressed that the situation is not healthy for dealers at the moment.
According to him, to get a good ‘Belgium’ car, one should be ready to cough out as much as between N15 million to N25 million.
“The challenge for the car dealers is the value of the naira which has depreciated. That is why they go more for second hand cars these days. Many dealers these days, it’s second hand cars you will see at their stands. Yesterday, a customer bought a second hand 2008 Honda Accord car for N5.5 million. Before, the second hand of that car sells for about N1.2 million. The way it is now, it is only rich people that still buy ‘Belgium’ cars,” the car dealer also stated.
…What CGC says
Earlier in the year, Comptroller General of the Nigeria Customs Service, Adewale Adeniyi, had during an interview on Arise Television, alluded to the fact that the exchange rate volatility was affecting businesses in Nigeria.
“It affected car dealers. We had as much as a 45 per cent decrease in the volume of cars that were brought into Nigeria in that period.
“And they were not the kind of cars that fetched optimum revenue for the customs. Not only cars, but even regular imports were also affected because people could no longer import raw materials as they wanted and the volatility did not allow them to plan for tomorrow,” the CGC stated.
In the same vein, Eneji Yahaya told Blueprint that the increase in demand for second hand cars is fuelled by persistent inflation which has eroded the purchasing power of many Nigerians.
“The bad thing about the high inflation rate is that there is no increment in salaries and wages of working-class people. Even the few whose salaries were increased; it still does not measure up to the level of inflation.
“Take for instance now, early last year, a second car I intended to buy was offered to me for N1.2 million but today, that same car now goes for N4.5 million. How many people still go for ‘Belgium’ cars? Most people can’t afford ‘Belgium’ cars at the moment,” Yahaya said.
For Musa, the cost of shipping is too high.
“Even our customs duty is too high. When you ask most car dealers they will tell you that customs duty is a major challenge for them. To clear a car is a herculean task these days,” he further said.