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Nigeria's leading finance and market intelligence news report.

Lagosians bought more cars in 2020 despite COVID

More new cars were registered in Lagos last year, 2020, despite COVID-19 and the economic challenges it brought along. It would appear shocking, considering decline in incomes and the need for people to shore up their savings as the year turned out increasingly unpredictable.

Data obtained exclusively by BusinessDay from the Lagos State Motor Vehicle Administration Agency showed that 319,550 new car registrations were done in Lagos last year, a 5.8 percent increment over 300,903 cars registered in 2019. Car registrations had increased every year from 196,257 documented in 2016, and the trend as the data show did not change even in a year many people had to pay more attention to their wallets.

Some bought the cars in response to COVID-19 itself to limit contact on the congested Lagos public buses, particularly the ‘Danfo’ variants. One of such is Dayo, who told BusinessDay COVID-19 was one of the factors for buying a new car. According to him, “I have a young family and there was a need to protect them.”

For some others who bought cars, it was just an opportunity to get a new vehicle as generally low purchasing power meant dealers had to use low prices to drive patronage. Yet, for others like this reporter, it was the February 2020 ban of motorcycles – popularly called ‘Okada,’ that jolted him to get a car. Using the chaotic Danfo system was not an appealing option, and the possibility of exposure to the Coronavirus following an inconvenient bus ride made the decision easier.

Purchase of ‘new cars’ would more often than not, refer to ‘Tokunbo,’ which are imported used cars. There are of course the Nigerian used cars now being sold to new owners. Overall, more people still bought cars.

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When Anita, a Lagos-based journalist bought her first car in August 2020, picking her grandmother for a ride was as she shared on her WhatsApp status, one of her happiest and most fulfilling feat. Her purchase cannot be said to have been driven by COVID-19, but the opportunity merely presented itself in a year more people in Nigeria’s economic capital braved the odds to splurge on new vehicles.

“My purchase was later in the year and had nothing to do with COVID,” noted Modupe Gbadebo, a public servant in Lagos, who also stressed the pandemic or lockdowns that followed didn’t prompt her purchase.

Before that purchase, she owned a 2005 Toyota Camry, which she referred to as ‘Big Daddy,’ how the car is identified in local parlance. The car had recurring mechanical issues so she sold it and added some of her savings to buy a 2008 Toyota Camry around the last week of November, which she again referred to as ‘Muscle,’ the car’s identification in local parlance.

Samuel Ikenebomeh, a car dealer, explains that a lot of people sold their Nigerian used cars at really low prices. “When you buy such as a dealer, it has to be cheap then you add a little money and sell with small margin,” he explains. From his explanation, it was clear many Nigerian used cars exchanged hands owing to cost. For some buyers, it was either their first car or still a new (additional) car purchase.

At the peak of the pandemic when lockdowns bit hard across businesses, even prices for some foreign used cars called ‘Tokunbo’ were reduced to encourage people to buy because the purchasing power last year was a bit low, according to Ikenebomeh.

“We were willing to let go of some profit just to make people come and buy,” he says. However, 2019 was for him way better than 2020 in general sales, especially for Tokunbo sales that also had higher margins.

Ademola Talabi, another Lagos car dealer, notes that people bought low-end vehicles in the midst of COVID-19 last year, unlike high-end options that were favoured in previous years.

The increase in car sales also came in a year the Third Mainland Bridge, Eko Bridge and Marine Beach Bridge were closed to traffic at different times during the year. The closed bridges had resulted in traffic increase, yet more cars were being bought to join the already long traffic jams.

It was also the year the ban on motorcycle took more hold than previous attempts, putting many people between two options; join the rickety, crowded Danfo buses that define public transport or take cabs, the conventional or Uber and Taxify. Buying a car and avoiding the inconvenience and cost for both options, respectively, won the debate many would have had in their minds.

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