The Deteriorating Car Market: Challenges Facing Working-Class Nigerians
Rising car prices in Nigeria stem from economic decline, making vehicles unaffordable for the working class. The market has shifted towards Nigerian-used cars due to high costs of new and fairly-used options. Dealers report a growing trend towards these vehicles, despite quality concerns. Tax burdens and fluctuating foreign exchange rates exacerbate these issues, leading many to seek lower-cost alternatives. Government intervention is necessary to support the automotive market effectively.
In Nigeria, the cost of owning a car has significantly outpaced the earnings of the working class, stemming from an economic downturn. During a recent training session, a facilitator recounted buying a brand new Volkswagen Beetle for just N3000 in the 1970s, implying how far economical conditions have deteriorated. Nowadays, many people struggle even to afford second-hand vehicles, let alone new ones. The market trends have shifted to Nigerian-used cars, with options like Car45 and Automania becoming prominent, although their quality remains uncertain.
The rise of Nigerian-used vehicles is largely due to the devaluation of the Naira, making new and fairly-used cars less affordable. Auto markets have adapted to meet the demands of a changing economy, with sales conducted from various informal locations, including streets and workshops. Notably, despite their prevalence, many of these second-hand cars are often in subpar condition due to poor maintenance and Nigeria’s deteriorative road conditions.
Prices for Nigerian-used cars remain high; for instance, a Nigerian-used 2003 Toyota RAV4 is selling for N4 million, while a Tokunbo version starts from N7 million. Auto dealers in Abuja report that the increase in the cost of fairly-used cars has led to a growing focus on cheaper, local options, though often at the expense of quality. Nuhu Ismaila, an auto dealer, indicated a shift towards Nigerian-used cars as they provide affordability, even if they come with quality issues.
Several auto dealers confirm that the high costs of fairly-used vehicles—sparked by government tariffs—are pushing customers towards more accessible Nigerian-used cars, despite lower profit margins. For instance, a dealer named Johnson Eremuye pointed out that there is a 35 percent tax burden imposed on car imports, making affordability a huge concern in the current climate.
The fluctuating foreign exchange rates exacerbate these challenges, with the dollar reaching crisis levels at N1600, further pressuring the car market and pricing potential buyers out. Izuchukwu Ezeokoli, a managing director, expressed skepticism about any upcoming changes in the market, noting that increased tariffs, port charges, and customs duties are likely to consistently raise vehicle prices.
The persistent economic challenges in Nigeria have culminated in a substantial increase in car prices, pushing the working class to the margins of vehicle ownership. Instead of new or fairly-used vehicles, many are turning to Nigerian-used cars at inflated prices and questionable conditions. Government regulations, economic instability, and shifts in the market have all contributed to this troubling trend, as well as changing attitudes towards employment benefits. Immediate solutions require policy adjustments and better automotive industry support to alleviate the burden on consumers.
Original Source: businessday.ng
