Concerns have emerged within Nigeria’s automotive market as car dealers anticipate a looming scarcity of foreign-used vehicles, popularly called tokunbo cars.
This situation stems from importation difficulties faced by dealers, predominantly due to challenges related to the exchange rate and import logistics.
In discussions with The PUNCH in Lagos, dealers attributed the potential scarcity to the impact of the high exchange rate on duty rates and the overall importation process.
Olaniran Adelana, the State Secretary of the Lagos State Motor Dealers Association, highlighted the dilemma faced by dealers in securing new stock.
“The rate of dollars is making it difficult for us to purchase cars the way we used to buy them from Europe. And we are having challenges selling old stocks because of the frequent depreciation of the naira,” he stated.
Adelana underscored the adverse effects of the currency fluctuations, noting that some dealers have been compelled to exit the market despite marginal recent improvements in the naira-dollar exchange rate.
Chinonso Amaraiwu from Chimex Motors at Berger Car Mart echoed similar sentiments, citing challenges in restocking as a major impediment.
He highlighted the significant reduction in the inflow of vehicles due to hurdles in vehicle importation, notably high import duties.
His words:
“Car sales are gradually picking up, but the major challenge now is how to replace the ones sold. Cars are no longer entering the country as it is used to because of the many challenges facing vehicle importation, ranging from the duty payable on imported cars to other challenges.
“The duty is discouraging a lot of importers from going into vehicle importation. Very soon, people will find it very difficult to buy cars, especially tokunbo vehicles, because they are no longer coming the way they used to come before now.”
Adding to the discourse, another dealer from Amuwo-Odofin, known as Chibueze, emphasized the direct correlation between the soaring cost of importing tokunbo cars and the exchange rate.
He pointed out the financial impracticality for dealers in re-importing vehicles due to substantial cost disparities between local sales and re-importation.
“The high cost of importing tokunbo cars is associated with the exchange rate. For instance, you can sell your car at its current price of, say, N6m, and when you want to bring in the same car of the same year and model, you will find out that you can’t get it for that amount,” he said.