The rising cost of petrol in Africa’s biggest economy is pushing some Nigerians to cars with smaller engines and higher fuel efficiency to save money.
On Thursday, queues at petrol stations gradually disappeared as Nigerians adjusted to a new era of N488-N577 petrol per litre following subsidy removal.
As the rising cost of fuel bites harder, BusinessDay’s findings showed many Nigerians are now opting for cars with smaller engines and higher fuel efficiency to save money.
“Unlike in the past when fuel was cheap and affordable, we got a lot of demands for big engine capacities that guzzle fuel, the recent rise in fuel prices has changed the dynamics,” Nnamdi Ogbeide, a car dealer at Berger Yard, the biggest used car market in Lagos, said.
“We are seeing an increase in inquiries for fuel-efficient cars from customers who typically buy Sport Utility Vehicles or range rovers,” Ogbeide added.
Read also: 8 Tips to stay fuel efficient amid subsidy removal
Nnamdi Ogbeide, a businessman in the construction industry, told BusinessDay he no longer drives his Chevrolet C2500 Suburban for long hours of business trips.
“Tell me, what sense does it make when you have to fuel the Chevrolet with more than N30,000 and use it for just three days?” Ogbeide asked.
Tunji Abiodun, an engineer in the telecommunications sector, said he is planning to sell his fuel-inefficient cars in order to save costs and get better value for money.
“Big cars provide satisfaction, comfort, and prestige, but when you consider the number of hours you spend in traffic and the rising cost of living, I have no choice but to go for small cars that provide all of the comforts,” Abiodun said.
According to findings by BusinessDay, a Mercedes Benz SUV ML, which used to cost N16,000 to fill the tank, now costs over N40,000, while a Toyota Highlander, which costs about N11,000 to fill the tank, takes more than N30,000.
“We expect the market demand for cars to change in the following weeks due to subsidy removal and rising inflation,” Nkem Eze, a car dealer, said.
According to Carmart, Nigeria, an automotive marketplace, available fuel-efficient cars include Toyota Prius, Honda Civic, Kia Niro, Toyota Corolla, Hyundai Ioniq, Toyota Yaris, Kia Rio, Nissan Versa, Honda Insight and Volkswagen Polo.
“The inflationary pressure is also forcing many Nigerians to change their shopping habits,” Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise, said in a new note.
BusinessDay findings showed the percentage of Nigerians’ disposable income spent on petrol varies depending on income level.
According to a 2022 report by the National Bureau of Statistics, Nigerians spend an average of 10 percent of their disposable income on petrol. This is significantly higher than the global average of 4 percent.
In Africa’s biggest economy, households and businesses have been treading water for decades – weighed down by dwindling income and rising prices – but the spike in inflation is sending more than a ripple of frustrations among Nigerians.
Over 105 million Nigerians still live in extreme poverty, according to data from the World Poverty Clock of the Brookings Institute.
In its report ‘The Continuing Urgency of Business Unusual,’ the World Bank said Nigeria’s accelerating inflation pushed an additional seven million into poverty by the end of 2022.
“Survival is the most difficult thing in Nigeria now irrespective of whether you are in the upper, middle- or lower-income class as there is no source of income the surging inflation is not affecting,” Benson Salami-Olayanju, chairman of Panfcm-Tech-Wise Treasure Investment, said.
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