On importation of accidented and damaged cars

Nigeria’s car sales have been shrinking in the last four years. For instance, Total number of new vehicles sold in 2016 was only 36, 000, lower than the 48, 000 sold in the previous year of 2015. For 2017, the figure was a little less than 10, 000. With an estimated population of 200 million, only about 10,000 new cars will be sold in Nigeria to both individuals and corporates. This ranks Nigeria as one of the worst places on earth to sell new cars, an irony considering that Nigeria is Africa’s largest economy.

Based on the 2016 data, South Africa, which boast of less than one third of Nigeria’s population and is the second largest economy on the continent, records the largest number of “light vehicle” sales in Africa, with about 561, 000 cars sold in the country in 2016, which is about 11.7 percent lower than the 590,000 cars sold in 2015. It ranked 23 in terms of global auto market sales down from 21 in 2015.

Egypt, Africa’s third largest economy, which has about half the population of Nigeria is estimated to have recorded 217,000 new car sales in 2016, down by 20.8 percent from the about 274,000 sold in 2015. The drop in car sales in Egypt pushed the country’s global ranking to 40 in 2016 down from 33 in 2015. There were about 164,000 “light vehicles” sold in Morocco in 2016 up from 132,000 in 2015. This improved Morocco’s ranking on the global auto market sales market to 45 in 2016 from 49 in 2015. Morocco has a population of just about 35 million people, which is about one fifth of Nigeria’s population.

Another North African country, Algeria, with a population of just about 40 million, recorded new vehicle sales of 129,000 in 2016 almost 50 percent down from 256,000 in 2015. Among the top 100 auto markets in the World, only Kenya ranked lower than Nigeria with its sales record of 13,000 cars in 2016. Now, based on car dealers’ projection, Nigeria is going to likely fall behind Kenya and out of the top 100 auto markets in the world in 2017.

Dwindling car sales in Nigeria has been fuelled by rising inflation and weaker naira which has led to a fast rise in car prices across the country. A recent report by BusinessDay shows that a brand new 1.6 litre Engine Kia Cerato automatic transmission saloon car, which used to sell for N3.6 million in early 2015 is now selling for N9.54 million. A base model Toyota Corolla, one of the most preferred brands for many Nigerians, which used to sell for N4.45 million three years ago now sells for N18.9 million.

Even corporates that used to be the biggest buyers of cars in the country for staff and business activities have since cut down on their demand, monitising it for their staff and outsourcing car services.

More unfortunately, even Tokunbo or second hand vehicles are now going out of reach of most Nigerians. Due to the automotive policy that increased tariff on imported cars to 70 percent, most (about 70 percent) vehicles imported into the country (through the seaports) are now very old and accidented vehicles to avoid the punishing tariffs and levies. A visit by BusinessDay to one of the terminals at the Tin-Can Island Port, Nigeria’s foremost roll-in, roll-out terminals for the importation of vehicles, most vehicles brought in by vessels were mostly low quality and damaged vehicles.

Meanwhile, the reason for the imposition of the punitive tariff has not happened. The lack of effective demand for new cars has stymied any plans of establishing vehicle assembly plants in Nigeria by car manufacturing companies.

The rational thing for the government to have done was to do away with the tariff but that is yet the happen. The implication is that the country is being turned into a dumping ground for used, old, accidented and vehicles and scraps. The economic, social, health and human costs of this foolery will be with us for a long while.