In 2024, Nigeria’s passenger car imports fell by 14.2% to N1.26 trillion, attributed to volatile exchange rates and rising inflation. The naira depreciated significantly against the dollar, causing a surge in customs duties. This has shifted consumer preferences, with many turning to locally manufactured vehicles due to affordability concerns.
Nigeria has experienced a notable decline in passenger car imports for the year 2024, driven primarily by fluctuating exchange rates and rising inflation. The country’s foreign trade report indicates that car imports fell by 14.2 percent, totaling N1.26 trillion compared to N1.47 trillion in 2023. This substantial decrease reflects the adverse impacts of the unstable naira and inflationary pressures on import activities.
The naira experienced a significant depreciation in 2024, losing 40.9 percent against the dollar in the official foreign exchange market, as detailed in a BusinessDay report. Despite some improvement in external reserves, the currency’s volatility continues to pose challenges for the economic landscape of Nigeria, revealing persistent issues in the foreign exchange market.
As of December 31, 2024, data from the Central Bank of Nigeria indicated that the dollar was traded at N1,535, a stark increase from N997 on the same date in 2023. This escalating dollar rate has reportedly led to a fourfold increase in customs duties on imported vehicles. Kelechi Achilike, a car dealer, expressed concerns regarding the increasing costs, stating that a Toyota Corolla, previously cleared for N450,000, now incurs a cost of N3 million for customs.
Achilike highlighted that due to high import costs, many prospective buyers are deterred from purchasing foreign vehicles, particularly older models. Some consumers are opting for locally manufactured cars, which are comparatively cheaper, while others still prefer imports, believing them to be of superior quality.
Furthermore, the car dealer noted a significant decline in sales, stating he used to sell about 10 cars weekly but now only manages to sell two cars monthly. He attributes this trend to the shrinking middle class, with new car buyers primarily consisting of affluent individuals, public officials, and those engaged in illicit activities.
In summary, Nigeria’s car imports have significantly decreased in 2024, largely due to volatile exchange rates and rising inflation that have hampered purchasing power. The depreciation of the naira against the dollar has caused rising costs for imported vehicles, leading to a shift in consumer preferences towards locally manufactured cars. Furthermore, the reduction in sales highlights the economic divide in the nation, with the middle class increasingly marginalized in the automobile market.
Original Source: businessday.ng
