Nigeria’s Passenger Car Imports Decline Due to Economic Pressures in 2024
Nigeria’s passenger car imports fell by 14.2% in 2024 due to volatile exchange rates and rising inflation, totaling N1.26 trillion. The naira depreciated significantly against the dollar, complicating economic stabilization efforts. Local car dealer Kelechi Achilike noted skyrocketing customs duties and a marked decline in sales, highlighting a shift in consumer preferences and a diminishing middle class.
In 2024, Nigeria experienced a significant decline in passenger car imports, primarily due to fluctuating exchange rates and rising inflation. The foreign trade report indicated that imports fell by 14.2 percent, amounting to approximately N1.26 trillion, down from N1.47 trillion in 2023. This downturn illustrates the ongoing challenges faced by the Nigerian economy, notably in its foreign exchange market.
The naira demonstrated substantial depreciation by the end of 2024, with an official loss of 40.9 percent against the dollar, despite increases in foreign reserves. The Central Bank of Nigeria reported that the exchange rate reached N1,535 per dollar on December 31, 2024, a notable decline from N997 per dollar just a year prior. This situation has exacerbated the difficulty of stabilizing the economy amidst persistent currency market instability.
Kelechi Achilike, a local car dealer, described the impact of soaring dollar rates and customs duties on vehicle importation costs. He noted that customs fees have dramatically increased, stating, “As aside from the dollar rates, the customs duty has quadrupled… Now it is 3 million, and when you spend this kind of money, you have to put it on top of the car.” He expressed that these costs deter potential buyers, leading to a sharp decline in sales.
In addition to rising costs, Achilike mentioned a shift in consumer preferences, with some opting for locally produced cars due to lower price points. However, a perception persists that locally manufactured vehicles may lack the durability of imported options. He also observed a significant reduction in sales volume, noting a drop from nearly ten cars a week to only two per month, attributing this to the diminishing middle class in Nigeria. “You know, now you don’t have a middle class anymore. You have either the poor or the rich,” he stated.
The decline in Nigeria’s passenger car imports in 2024 underscores significant economic challenges driven by currency volatility and inflationary pressures. With the naira’s depreciation and increased customs duties severely affecting import costs, consumer behavior has shifted, emphasizing the preference for locally manufactured vehicles despite lingering doubts about their quality. The shrinking middle class further complicates the automotive market, resulting in dramatically reduced sales across the sector.
Original Source: businessday.ng
