Naira devaluation, FX up prices of new cars by at least 142% in 4yrs

Prices of cars in Nigeria especially brand-new cars have skyrocketed in the last four years due to the naira devaluation and high exchange of naira against the dollar.

This has increasingly made purchasing brand-new cars unaffordable to many Nigerians as in most cases the cost of buying new cars in Nigeria has grown by at least 142 percent.

According to automakers, the constant adjustment of the exchange rate for clearing imported cars and spare parts at the nation’s seaports by the Nigeria Customs Service (NCS) is also resulting in a rise in the prices of brand-new cars.

Using Suzuki brands that control 22 percent of brand-new cars sold in Nigeria as an example, Aissatou Diouf, general manager of Suzuki by CFAO told journalists in Lagos recently that, in 2019 when Suzuki officially launched in Nigeria, Suzuki Alto car was sold for N3.7 million and none of the Suzuki range of cars was sold up to N10 million then.

According to her, the brand-new Suzuki Grand Vitara was sold at N9.9 million at that time but from 2019 to October 2022, when the naira was devalued the price Grand Vitara was sold at N20 million.

Today, she said, Suzuki Grand Vitara now goes for N24 million, adding that other brand-new mini-SUVs in that category such as Hyundai Creta are now sold for about N22 million and N23 million.

“The prices of cars are up because of the devaluation of the naira, and the Customs has also increased the exchange rate for clearing imports to almost N589.45/$.

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“Though, for us, nothing has changed. Before, the Customs exchange rate was around N422.3/$. We buy a lot of FX from the banks to import these cars and spare parts, and FX is sold at about N770,” she said.
She however said that she does not believe that prices will go down any time soon in Nigeria’s automotive industry due to these factors.

BusinessDay checks show that the naira closed on an average of N362.60 against the dollar in 2019 while the naira closed at N470/$ at the end of year 2020 and N740/$ at the end of year 2022.

Going back to about 10 years back, when the naira was exchanging at an average of N159.267/$ and FX was low, people were buying Suzuki Alto for as low as N1.5 or N2 million.

At that time, the prices of cars were very interesting and automakers in Nigeria were selling volumes because the demand was high, and the prices were affordable.

It was also discovered that the price of foreign-used cars has also skyrocketed within the same period as the brand-new cars.

For instance, a foreign-used Volkswagen Golf car that was sold for between N350,000 and N450,000 now goes for N2 million and above depending on the model and the year of the car.

This development shows that paying high Customs tariffs on imported cars, inflation and dollar scarcity in Africa’s biggest economy have been having a huge impact on the costs of imported goods including cars in recent times.

Also, the introduction of VIN valuation by Customs for determining the duties payable on imported used and new cars has increased the import duties on cars.