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Demand for used cars in Nigeria surges amid high inflation and declining GDP

A new report has found that the used car market in Nigeria will continue to thrive as consumers opt for more affordable mobility solutions amid skyrocketing new car prices. The spike in new vehicle prices deters some customers from purchasing brand-new vehicles, leading to the surging demand for used cars in Nigeria.

Demand for used cars in Nigeria surges amid high inflation and declining GDP
  • High inflation and declining GDP in Nigeria have led to a surge in demand for used cars.
  • The spike in new car prices due to the devaluation of the naira and the increase in exchange rates has further fueled the demand for used cars.
  • The rising adoption of digital technologies and online auto platforms is also driving the growth of the used car market in Nigeria.

According to a recent market analysis by Modor intelligence, the prices of new cars shot up extensively as of July 2023 as a result of the devaluation of the naira and the increase in exchange rates for clearing imports, which has had approximately a 15% impact on the prices of new cars.

Since then, consumers have shifted their preference towards availing imported used cars, especially "Tokunbos," which are popular for their affordability and reliability. Additionally, the emergence of online auto platforms has made it easier for consumers to access vehicle information, compare prices, and make informed decisions when purchasing a used car.

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“More buyers are opting for online platforms like Cars45, Carmart, and Jiji to browse, negotiate, and finalise deals,” the report noted.

The report projected that the used car market in Nigeria, currently valued at USD 1.14 billion, is anticipated to surpass a net valuation of USD 1.74 billion, registering a CAGR growth of 8.9% in 2024.

This is partly due to the price of Tokunbo cars, which increased by almost 100% after the Nigeria Customs Service (NCS) in June 2023 increased the import duty on vehicles from 39.45% to 39.62% to reduce the dependency on imported cars while promoting the domestic manufacturing sector.

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Following the announcement, it was estimated that a 2005 model of the Toyota Corolla that sold for an average price of Naira 1.9 million (USD 2,519) in 2021 was being sold at Naira 4 million (USD 5,305) in June 2023, while a 2004 Honda Accord of Naira 1.6 million (USD 2,122) on an average was being sold at an average price of Naira 2.9 million (USD 3,846).

Another interesting insight from the report showed that used sedan vehicles remained the preferred choice of consumers willing to purchase used cars in the Nigerian market, thanks to their lower price compared to their sports utility vehicles (SUVs) and multi-purpose vehicles (MPVs) counterparts. Some of the top-selling used sedan models in Nigeria were the Toyota Corolla, Toyota Camry, and Honda Accord, among others, as of June 2023.

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