Nigeria’s lingering foreign exchange challenge, which has driven up the prices of vehicles of all categories in the country, is changing consumer preferences in the brand-new car market.
Some individual car users and companies are now embracing Chinese brands for new car needs because they are less expensive than those from German, Japanese and American car makers.
The number of brand-new vehicles made by GAC, Geely, Changan, Chery, and Jetour on Nigerian roads are increasing, signifying a growing rise in the demand for Chinese cars, especially for official use.
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Aside from the hike in car prices, the recent removal of petrol subsidies that resulted in an increase in the pump prices of petrol from N195/litre to between N595 and N630/litre has also influenced the demand for smaller engine vehicle types that are more fuel-efficient.
For instance, increased petrol costs have boosted demand for hybrid cars with smaller engines due to their better fuel efficiency.
Ojurongbe Damilola, head of technical services at Cars45, told BusinessDay that there has been a shift in demand for Chinese brands among companies that primarily opt for brand-new cars and some local banks now go for GAC for their staff.
He said the recent foreign exchange crisis has led to exponential price increases for new and foreign used cars, which has slightly dampened demand for both categories of cars compared to previous years.
He said while the demand for new vehicles, particularly Chinese brands, remains notable among certain segments of the market, there is also a shift in demand for Nigerian used cars, which further highlights the impact of the FX crisis on consumer preferences in the Nigerian automotive market.
“Nigeria’s auto market and consumption pattern is shifting from the top to the lower end of the market due to the FX crisis that is resulting in rising prices in vehicles,” said an executive of a luxury auto brand in Nigeria who declined to be identified.
Pointing out that the government is still the highest buyer of luxury automotive products in Nigeria, the source said many Nigerians are leaving the luxury end of the market as economic headwinds bite.
According to him, dealers of luxury auto brands now wait for customers to place orders before bringing in any luxury car into Nigeria because no dealer would want to burn his or her fingers on a car that costs hundreds of millions to buy.
The source also said that FX volatility is not making it easy for dealers to buy spare parts to maintain the vehicles in Nigeria in terms of the after-sales division.
An analysis of prices between popular Japanese brands such as Toyota and Chinese shows that a brand new sedan car like the Toyota Camry 2.5l and 3.5l V6 sell for N48 million and N53 million, while a new compact SUV such as Chery Tiggo 4 and Chery Tiggo 7 Pro Max sell for about N15.4 million and N29.4 million, depending on the model.
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Oluseun Onigbinde, director of BudgiT, said on his X handle @Oluseunonigbinde that his firm has left Toyota and opted for Changan, a Chinese brand.
“We have left Toyota. We are now on Changan,” the tweeted.
Responding to the tweet, Sim Shagaya, chancellor of Miva Open University, said on his X handle @SimShagaya that they have stopped buying new cars but when they restart, they will buy Chinese ones.
“We have virtually stopped purchasing new vehicles. When we restart, the new vehicles we purchase will be Chinese,” he said.
Abidoshaker @Chisomnazu said: “Correct. Even the government now cannot afford to mass buy Toyotas like before. They are busy buying Gac, Jac and Jik cars. You can’t even mass-buy Hyundai and Kia.”
Adebola @Adebxla said that the Kwara State Government has been buying Chinese brands for its cabinet members.
“The KWSG, for instance, has been buying Chinese brands for its Cabinet members, such as Mikano and Geely,” he tweeted.
Another X user tweeted @biodun2212: “I’ll gladly drive some of those Chinese brands Geely, Changing, Jetour etc.”
Damilola said that the use of black-market exchange rates for clearing cars at the port by the Nigeria Customs Service until the recent intervention by the Central Bank of Nigeria is also impacting the prices of vehicles.
“Changes in import tariffs, taxation, and regulations such as the proposed automation of the vehicle clearing process at ports in 2023 directly impact vehicle prices in Nigeria,” Damilola said.
He said this explains why there has been a noticeable shift in attitudes toward vehicle financing among Nigerians who previously saw taking car loans as unfavourable.
He added that there has been a growing acceptance of financing options for purchasing vehicles unlike before.
Citing an example of how the FX rate has impacted Nigeria’s auto market, Aissatou Diouf, general manager of Suzuki by CFAO told journalists in Lagos recently that, in 2019 when the exchange rate was about N365 per dollar, the brand-new Suzuki Grand Vitara SUV was sold for N9.9 million but when the naira closed in 2022 at N735/$ in the black market, Suzuki Grand Vitara was sold at N20 million.
In 2023, when the FX rate ended the year at N907.11/$, the Suzuki Grand Vitara was sold for N24 million while other brand-new mini-SUVs in that category such as Hyundai Creta sold for about N22 million and N23 million.
In Nigeria’s foreign used car market, prices have not been budget-friendly as well.
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Damilola explained that in 2015, a foreign used 2005 Toyota Corolla on Jiji cost around N1.9 million but in 2024 the same car now goes for about N6.5 million.
He said the Nigerian used counterpart was priced at N1.2 million back in 2015, but now prices range between N3 and N3.5 million.
“Before the FX crisis in 2023, the same car was sold for N4.5 million for foreign used and N2.5 million for the Nigerian used options,” he added.
Many Nigerians have expressed concern over the ease of maintenance of Chinese vehicles and the availability of spare parts in the Nigerian market.
Checks by BusinessDay show that most authorised dealers of Chinese brands established the after-sales section of the business to provide Nigerian customers with a wide range of after-sales options to suit their needs.
For instance, Carloha Nigeria, the authorised dealer of Chery vehicles, just like their counterparts established certified service centres where Chery cars in Nigeria are serviced and maintained by qualified technicians.
They also ensure that the spare parts required for this purpose are made available in earnest.
