Skyrocketing Inflation Renders Imported Vehicles Unaffordable for Many Nigerians – The escalating inflation in Nigeria, the most sizable economy in Africa, is causing both new and used imported vehicles, often referred to as ‘Tokunbo’ cars, to become unaffordable for a vast number of Nigerians, particularly those in the lower-income bracket.
The inflation rate, which was recorded at 22.04 percent in March, combined with shrinking household incomes, is significantly undermining the purchasing power of consumers. Data from the National Bureau of Statistics reveals that wage growth is lagging far behind the inflation rate.
Tosin Onifade, a food delivery entrepreneur, shared, “I had plans to purchase a reasonably priced Tokunbo car this year to aid in order deliveries, but the latest prices demonstrate that it’s no longer within my means.”
A 1.6-litre automatic transmission Kia Cerato saloon car, which cost N3.96 million in 2015, now has a price tag of roughly N23.4 million. Similarly, a Kia Picanto with a 1-litre engine, initially priced at N2.25 million in 2014, is currently sold for N14.76 million, as per a 2022 price list from Dana Motors.
Young entrepreneur, Chika Okorie, commented, “It’s exasperating. I’ve been saving for years to buy a car, but each time I’m close, the prices surge yet again, and I’m back to the starting point.”
According to Oluwafemi Amisu, regional manager of Auto Auction Mall, the steep costs of new cars, in addition to the lack of beneficial vehicle financing options, render many individuals unable to meet the required payments, with the financing interest rates being unfavorable.
Mohammed Lawal, a fabric dealer, noted that because of the inflating prices, he has abandoned plans to buy a ‘Tokunbo’ car, instead opting for a “clean Nigerian used car”.
Citing the current economic climate, Lawal remarked that the middle class has essentially been wiped out. He stated, “You’re either affluent enough to afford a new or ‘Tokunbo’ car, or you’re poor and left with no option but to walk or use public transportation.”
Data from the National Bureau of Statistics shows a 47 percent decrease in the value of used vehicles imported into Nigeria in 2022, down to N325.05 billion from N617.48 billion in 2021.
A PwC report indicates that 63 percent of Nigerian households cannot afford to purchase a car without some form of assistance. The report estimates that Nigeria has 14 million cars on its roads, with used cars accounting for approximately 70 percent of all vehicle sales.
In 2013, Nigeria launched the National Automotive Industry Development Plan with the goal of attracting foreign direct investment, reducing the reliance on imported vehicles, and encouraging local automobile production.
Despite these efforts, issues including multiple taxations, port-related difficulties, exchange rate fluctuations, and business operation challenges continue to drive up car ownership costs.