By Chinenye Anuforo
Cars45, an online platform that buys, sells, prices, and rates the condition of pre-owned autos, has decried how forex crisis has impacted all car categories, especially foreign used cars, due to their ties to exchange rates.
According to head of technical services at Cars45, Damilola Ojurongbe, the foreign exchange crisis in Nigeria has led to increased prices for foreign-used cars, resulting in a reduction in demand, as individuals seek more affordable options.
He said, “We have been witnessing a steady rise in rates over the years, with the FX crisis impacting all car categories, especially foreign used cars due to their ties to exchange rates.
“This unpredictability has led dealers to pass on costs to clients, causing a surge in demand and prices for Nigerian used cars,” he stated.
He said recent changes in import tariffs, taxation and regulations, such as the proposed automation of the clearing process at ports in 2023, directly impacted vehicle prices.
According to Ojurongbe, the Nigerian Customs Service started using black market rates for clearing, until the recent intervention by the Central Bank of Nigeria.
Continuing, Ojurongbe stated that the recent removal of subsidies, particularly on gasoline, was causing a ripple effect in the market.
He said, with the increased petrol costs, consumers are reevaluating their vehicle choices, favouring options that offer better fuel efficiency.
Ojurongbe pointed out the shift in demand is boosting interest in hybrid cars, which are renowned for their ability to maximise fuel economy.
However, in the Nigerian brand new vehicle market, he explained there are various categories, including German brands like Mercedes-Benz, Japanese brands like Toyota, Korean brands like KIA, and Chinese brands like GAC: “There’s been a shift in demand to Chinese brands, among companies that primarily opt for brand new cars. You can see that play out in some local banks who now opt for GAC over KIA for their staff.
“In terms of financing options, he said with more financing companies entering the market, customers can now make their choices from a broader range of car loan providers. “This increased competition among financiers has made financing more accessible to a larger segment of the population.”
He added that the concept of financing has become more acceptable among Nigerians. “People are now more willing to consider vehicle loans as a viable option for buying cars, due to the financial burden it takes off them.
However, with the recent Monetary Policy Committee (MPC) meeting of the Central Bank resulting in an increase in the Monetary Policy Rate (MPR), there are rising concerns about how this will impact loan interest rates, including car loans. Notwithstanding, consumers remain hopeful for favorable outcomes amidst these changes”, stated.