Naira Plummets: Used Vehicle Prices Soar, Sales Drop

Naira Plummets: Used Vehicle Prices Soar, Sales Drop
Naira vs Dollar

The continued depreciation of the naira against the world’s major currencies is hitting hard on the Nigerian economy, with the importation and patronage of used vehicles, popularly called Tokunbo, at an all-time low.

These are not the best of times for importers of and dealers in second-hand vehicles due to unexpected low patronage occasioned by the continuous fall in the value of the naira against the United States dollar and other international currencies.

At the Berger Automobile Market in Lagos, one of the biggest used cars marts in Africa, activities are currently at their lowest ebb, with the naira’s falling value making the importation of used car nearly impossible, while the prices of the few available ones have skyrocketed. As a result, car dealers at the market are turning to other things to eke out a living.

About 27 parks constitute the Berger Automobile Market, all clustered along the busy Apapa/Mile 2 Expressway. The market plays host to over 12,000 people who directly and indirectly depend on the sale of imported second-hand vehicles for their survival.

The parks, which parade various brands of imported vehicles, has over the last five months lost a huge chunk of its already dwindling clientele. The reason, according to analysts and dealers, is that many Nigerians can no longer afford to buy imported vehicles due to the plummeting value of the naira.

The President, Berger Car Dealers Association, Mr. Metche Nnadiekwe, lamented that dealers at the auto mart were being forced to sell their vehicles at a loss in order to avoid tying down capital.

He said the car dealers were diverting their capital to other businesses other than vehicle importation and sales.

Nnadiekwe stated, “Importation of vehicles is no longer profitable. It does not matter whether you are importing from Europe or through the Seme border. The current exchange rate has caused the naira to crash against every major currency.

“You spend so much money importing a vehicle into the country only to pay an additional 35 per cent duty. Who is going to buy the vehicle? As it is, we are unable to increase the prices of our vehicles. Things are so bad that when clients come to buy, they price the cars below the cost price and we are forced to sell at a loss.”

He added that no car dealer was currently importing vehicles as they had yet to exhaust old stocks due to poor patronage.

“We implore the Federal Government to do something about the situation. Go round the market, there are empty lots all over. Already, some of us are divesting our stock in order to raise capital for other businesses. If things continue like this till June, we will have a crisis,” he said.

Prior to the naira’s free fall, Nnadiekwe had last year raised the alarm that car dealers at the market had reduced the volume of their imports by half following the 35 per cent duty increase on imported used vehicles.

Just recently, the PTML Area Command of the Nigeria Customs Service lamented the drop in volume of vehicles imported through the terminal.

The Public Relations Officer of the command, Steve Okonmah, said it was now examining one container daily on the average against 98 containers daily in the previous years.

Giving a breakdown of vehicles imported through the PTML, a Roll On Roll Off terminal, Okonmah said only 66,000 came in 2015 as against 224,000 in 2014 and 278,000 imported in 2013.

He attributed the command’s poor performance in revenue generation to the declining volume of imports at the terminal.

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