Nigeria’s shrinking car sales and economy

Since the recession kicked in, car sales in Nigeria have plummeted. Total number of vehicles sold in 2016 was only 36, 000, lower than the 48, 000 sold in the previous year of 2015. Car dealers are even sceptical and do not expect sales to exceed 10, 000 this year. With an estimated population of 185 million, only 10,000 new cars will be sold in Nigeria to both individuals and corporate. This will rank Nigeria as one of the worst places on earth to sell new cars, an irony considering that Nigeria is Africa’s largest economy.
A report on focus2move.com on the top 100 countries for sales of “light vehicles” ranked Nigeria at number 77 in terms of the number of “light vehicles” sold globally in 2016. Nigeria’s car sales for 2016 was just 36, 000. This resulted in Nigeria’s global ranking for auto market sales dropping from 71 in 2015 to 77 in 2016. If, as is projected, new car sales drop to 10,000 in 2017, the country will actually fall out of the top 100 auto markets in the world despite being the most populous African country and having 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 corporate 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.
Sadly, even Tokunbo or second hand cars are out of reach of most Nigerians as a result of government’s automotive policy. Of course, the lack of effective demand for new cars has stymied any plans of establish vehicle assembly plants in Nigeria by car manufacturing companies. Government must act to reverse this situation if not Nigeria will continue to be a dumping ground for used, old, accidented vehicles and scraps.