It’s no news that prices of cars keep hitting the sky on a daily basis. The amount you used to buy a 2007 Toyota Corolla in 2019 can’t get you same car as at today. It’s now almost double that price. This may keep you wondering why these prices keep going higher or better still, stable.
Both importers and end users of cars in Nigeria are feeling the heat of this rising cost of cars in the country. Be it brand new car or tokunbo.
We would highlight some of the reasons for the rising cost of cars in Nigeria.
Importation businesses in Nigeria over the years is suffering from the widening exchange rate of naira to dollar. This is one of the killers of this car importation business. Nobody want to do business and at the end of the day be at loss. Due to this dollar rate saga, most importers of car would adjust their prices at the end of the day to make their profit. A dollar that was N197 in 2015 is now N610 as at the time this post was made. As you can see, it has gotten this bad and it is one of the reasons for the rising cost of cars in Nigeria.
The outbreak of the global pandemic in a way contributed the hike of car prices. During this period, USA – where most foreign used cars come from were on lockdown. Most countries were on lockdown and this brought to halt crucial economic activities worldwide.
Automobile manufacturing companies halted production. Very few people could be able to sell their used cars to dealers. car rental companies were out of business too;no demand for new vehicles or the release of new ones.
So all these created scarcity of used vehicle in the market and you know what that implies. When demand is above supply, the price of the commodity will hit the sky. It only gets to the highest bidder.
All these stuff happening in USA is affecting us here in Nigeria because that’s where most of our imported cars come from.
3. Cost of clearing cars from the port (Import Duty)
Every car imported into Nigeria must be cleared at the port by the Nigerian Customs Service. Of course, it comes with a fee and you have to pat a designated import duty and some other service charges to get your car out from the port. The dollar exchange rate we’ve talked about earlier also affects the import duty because it is used in the evaluation of the import duty to be paid.
This duty keep increasing over the years. The amount you used to clear a 2010 Lexus RX350 SUV in 2019, can’t clear same car as at June 2022 when this post was made. It keeps going up. Importers on their own end won’t accrue all these cost; it will all be added to the selling price of the car.
One of the reasons why it is not so easy for an average Nigerian to comfortably buy a car is due to the import duties placed on vehicles. If you really want to find out yourself, you can use our Autojosh Import Duty Checker to check of over 5000 cars.
These are the three major reasons for the rising cost of cars in Nigeria.
Do you think we missed any point? Let us know in the comment section.