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Research indicates that the second-hand vehicle market in Nigeria has reached its peak, with many Nigerians unable to purchase imported cars anymore.
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They revealed that the fluctuating exchange rate and customs duties are encouraging more Nigerians to opt for second-hand vehicles manufactured domestically.
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The era when imported cars, lovingly called “Tokunbo,” were the preferred choice for numerous Nigerians is rapidly fading away.
Pascal Oparada from SANGGRALOKA.COM.ng has covered technology, energy, stock markets, investments, and economic matters for more than ten years.
An ideal combination of financial challenges, such as a weakening naira, rising expenses, and fresh import duties, is turning these foreign vehicles into an extravagance that only a small number can purchase.
This movement is not only transforming the Nigerian automotive sector; it’s establishing a fresh economic scenario where vehicles produced domestically reign supreme, alongside an unexpected rise in a new category of consumers.
Financial pressure: The cost of a tokunbo
For many Nigerians, imported vehicles have long been seen as a dependable and cost-effective choice.
However, this situation has changed. As per car dealer Nurudeen Amodu, costs of well-known models have increased significantly.
He points out that a 2003–2006 Toyota Camry, which previously sold for approximately N1.5 million, currently has a price tag of up to N10 million. A Honda CR-V that cost N5 million is now being offered at N13 million.
The sharp increase in prices is directly linked to the weakening of the naira compared to international currencies along with significant import taxes.
Imported cars become more expensive due to customs taxes
The newly implemented 4% Free On Board (FOB) charge from the Nigeria Customs Service has further deteriorated matters.
Although the Customs Service states that this charge, which has replaced the previous 1% Comprehensive Import Oversight Program, is intended to support modernization initiatives, authorized customs brokers argue that it leads to higher operational expenses.
This additional monetary strain is transferred straight to the customer, causing imported prices to rise further and turning cars into nearly inaccessible extravagance for the typical Nigerian.
The Nigerian second-hand vehicle market leads the way
With the rising expense of imported used cars, locally sourced second-hand vehicles are witnessing an extraordinary increase in demand.
Auto sellers, who previously depended on imported vehicles, are currently concentrating on the growing local market.
E-commerce sites, social networking services, and local dealerships are experiencing an influx of car advertisements from individual sellers, with increasing numbers of Nigerians compelled to part with their vehicles to cover basic expenses.
As per a Punch article, for certain individuals, parting with their car is a final option when dealing with monetary difficulties. Olumide Adegbola, an independent car owner, was forced to sell his Toyota Corolla to support his household.
“The economic situation has been very challenging recently. I can’t even buy essential items anymore,” he said with sorrow. He sold his car for N4 million, which was double the price he originally paid, simply to keep going.
A different individual, Yunusa, had to sell his vehicle due to urgent circumstances, confessing that he deceived a customer regarding his trip for selling it.
He now wonders when he will finally be able to purchase another one. This bleak situation faced by numerous Nigerians is fueling the growth of the second-hand vehicle market locally.
Buyers from Cotonou and Nigerian security forces
Customers in Cotonou and Nigeriian military units
Purchasers of Cotonou and Niigerian guards
Shoppers from Cotonou and Nigerean patrolling groups
Individuals from Cotonou and Nigerian surveillance teams
The financial transformation is so significant that it has altered the usual direction of commerce.
Nurudeen Amodu, a vehicle seller, remembers an era when him and fellow dealers used to go to nearby nations such as the Republic of Benin to purchase automobiles.
Currently, the situation has changed. Amodu recently welcomed clients from Cotonou who arrived to purchase used Nigerian vehicles, noting that their currency holds greater worth compared to the naira.
This pattern is particularly evident in border regions such as Sokoto, where vendors are experiencing a rise in customers from the Niger Republic.
Auto dealer Haruna Abubakar mentions that he currently receives more clients from Niger compared to those inside Nigeria, as purchasers opt for well-known vehicles such as the Toyota Corolla and Camry.
They are attracted by more favorable prices and the stronger value of their currency compared to the naira. Some have also requested Nigerian license plates, which they are allowed to use in their own country under local regulations.
This emerging situation serves as a powerful representation of Nigeria’s financial difficulties and their effect on local commerce.
Examining within: The push for domestic production
The ongoing crisis has brought attention back to Nigeria’s need to concentrate on its automobile sector.
Auto dealers such as Sam contend that domestic producers should create cars that are cost-effective and appropriate for the typical Nigerian consumer.
In the same way, the Association of Motor Dealers of Nigeria (AMDN) is diligently collaborating with the National Automotive Design and Development Council to turn this idea into reality.
It is hoped that a strong domestic industry will protect Nigerians from fluctuations in currency exchange rates and import duties, offering a long-term answer for a country facing challenges in keeping its people mobile.
10 Popular Cars That Nigerians Can Purchase for Under N5 Million
SANGGRALOKA.COM.ng
Previously reported that with fluctuations in exchange rates and increasing inflation, the resale value of used cars is going up, turning vehicle ownership into an investment.
The significant dependence of Nigeria on foreign-made automobiles, fluctuations in currency value, and rising prices have led to an increased interest in second-hand vehicles.
As per recent reports, auto sellers in Nigeria stated that the increasing price of second-hand vehicles is mainly attributed to two reasons: currency exchange fluctuations and customs fees.