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VON Auto

Nigerian used cars takeover market as auto policy, harsh environment hit producers

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Strong indications have emerged revealing that Nigeria’s auto market is now dominated by Nigerian used cars instead of new cars and fairly used imported vehicles, popularly called ‘Tokunbo’.
Checks by Business Hilights in Lagos and other mega cities in Nigeria show that virtually every street, nook and crannies of the metropolis have been taken over Nigerian used cars and accidented imported cars sales outlets.
Nigerian used cars are easily identified by the presence of Nigerian number plate.
Further industry investigations show that Nigeria’s automobile industry has been reeling under the pangs of harsh operating environment, just as the bottom-line of the sector’s listed equities, since 2015, remained subdued, with gloomy outlook, due to policy summersaults.
Most hit, within the period, were the share prices of these companies on the trading floor of the Nigerian Stock Exchange (NSE), which have remained stagnated at nominal value year-to-date, following negative sentiments that have enveloped the demand for the stocks.
Though observed shocks in general economic activities and disposal income since the economy plunged and exited recession have led to only fewer people going for new vehicles.
Further checks show that prices of new vehicles has exponentially risen, leaving many people below that the line of affordability, as the economy brands of the cars, which go between N2 million and N3 million are now between N10 million and N15 million.
The small and medium sector operators have also been squeezed by the poor economy, as they now go for the fairly used vehicles that are less seemingly less expensive, causing Nigeria’s auto industry, unlike its counterparts in other countries, to face challenges that retard its growth potentials.
Analysts say some of these impediments include disparity in tariffs, external competition, high production costs, smuggling, inaccessibility of finance, absence of functional industrial clusters for production of automobile and lack of modern technology.

Business Hilights is an online news channel conceptualized and structured to report and track on a daily basis; latest developments in critical business sectors to serve as a one stop news gateway for governments, foreign and indigenous investors.