The car import industry in Nigeria is facing a significant setback, experiencing a 60% decline in vehicle imports over the past 12 months. This downturn is attributed to the exacerbating foreign exchange crisis in the country, which has led to a challenging economic environment.Thank you for reading this post, don't forget to subscribe!
Stakeholders in the transportation sector have expressed concern over the substantial drop in car importation, with total imports through Nigerian ports currently standing at 132,293 units. This marks a considerable decrease from the 194,550 units recorded in 2022. The forex crisis, characterized by the naira trading at ₦1,418/$1 in the parallel market and an inflation rate of 28.92%, has contributed to this decline.
Local vehicle manufacturers in Nigeria are also grappling with the adverse effects of the crisis. The production of affordable, made-in-Nigeria vehicles for the lower socioeconomic segments of the population has become a formidable challenge.
Ajibola Adedoyin, the National President of the Association of Motor Dealers of Nigeria (AMDON), emphasized that the 60% reduction is a conservative estimate. Many car dealers have reportedly abandoned the vehicle dealership business due to the crisis, exacerbating the challenges faced by the industry.
Adedoyin highlighted the potential negative consequences for commuters, anticipating increased transport levies as vehicle owners attempt to offset the high costs of their vehicles. Moreover, he expressed concerns about a rise in road accidents, as transporters may struggle to replace worn-out vehicles and might be forced to operate old and faulty ones.
The crisis in the industry is linked to the depreciation of the naira, forex market volatilities, high duties, levies, taxes, the Vehicle Identification Number (VIN) valuation policy of the Nigeria Customs Service (NCS), as well as rising poverty and weakened purchasing power among consumers.
Vehicle dealers have pointed out that while vehicle costs in Europe and America have remained stable or even reduced in some cases, the increase in vehicle costs in Nigeria is primarily attributed to the Naira equivalent of the purchase price, customs duty, clearing costs, and port charges.