Experts believe that the decline in Nigeria’s imports is attributable to the incessant shortage of foreign exchange and mounting pressure on the naira currency. In particular, the currency shortage and the exorbitant cost of processing imported cars at the ports have led to a precipitous drop in Nigeria’s vehicular imports, notably used cars, to the lowest level since 2018. According to figures released by Nigeria’s National Bureau of Statistics (NBS), the country imported used foreign cars worth N169.1 billion in the first half of 2022.
This represents a 51.2 percent decline from the N346.29 billion recorded in the corresponding period of 2021 and a 37.7 percent decrease from the N271.2 billion spent in the second half of last year. Figures released by the NBS show that Nigerians had spent the least on imported cars since the first half of 2018 when they forked out N59.1 billion on pre-owned vehicles. A similar trend can be seen with the importation of cycles and motorbikes into the country.
Foreign used car prices surge amidst FX scarcity.
Furthermore, it was revealed that the declining value of the naira on the international market has also led to a rise in the price of imported used foreign cars by an estimated 50% over the last year. For instance, the price of a Toyota Camry 2007 and 2009, which sold for an average of N3.3 million last year, has risen to a minimum of N4.1 million. A new Toyota Corolla has risen from a price of N2 million to over N3.5 million.
Similarly, a Lexus ES 350 (2007 to 2013 model) now costs an average of N5.3 million. It was sold for an average of N3.5 million as of this time last year. Car dealers in the country have lamented the scarcity of foreign exchange (forex) and its heavy toll on Nigeria’s automobile industry, stressing that the liquidity crisis has stifled importation and hiked the price of used foreign cars. They attributed the price surge to the cost of clearing the cars at the port and the significant depreciation in the exchange rate.
Car dealers raise concern over the price surge.
One of the dealers in Berger area, Lagos state, Emeka Agbi, also affirms that the falling exchange rate has affected the cost of buying cars abroad, while the cost of clearing the merchandise from the ports has also doubled. He said they initially clear for an average of N600,000 but have now risen to as high as N1 million, which has made it impossible to sell low-budget cars, as Nigerians would not be willing to buy early model cars at a high price.
Additionally, Akinjide of Auto Land in Ikeja, Lagos, stated that average income earners in Nigeria could not afford to purchase foreign-used cars anymore due to the hike in the price. Instead, they go for Nigerian used cars. He concluded by saying that people involved in the car dealing business are currently going through a hard time as sales have dropped significantly on the back of a hike in selling price, bedeviled by the increase in the cost of clearing vehicles and naira depreciation.
Naira decline hits one thousand naira against the US dollar.
Recall that in July 2021, the CBN stopped selling foreign currency to Bureau de Change on the grounds that the parallel market was being used to launder money and facilitate illegal currency exchanges. However, the naira has plummeted as a result of this move. As of July 29, Naira depreciated against the US dollar at the official market, declining 0.66 percent to N429.00 per dollar from N426.20 at the Nafex window the day before. The currency has recently plummeted to as low as N1000/$ due to a deficit in foreign exchange supplies as demand soared.
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