Why Nigeria’s luxury car market will continue to grow despite inflation

Despite rising inflation and economic instability, Nigeria’s luxury car market will continue to experience growth, Maxim Makarchuk, chief operating officer of Jiji and Cars45, has said.

According to him, the industry stands as a symbol of elegance, prestige, and affluence in Nigeria’s dynamic economic landscape.

Statista shows that Nigeria’s luxury car market revenue is projected to reach $32 million by the end of 2024 and has an annual growth rate of 14.75 percent, with a projected market value of $55 million by 2028.

“This growth will be driven by various factors including changing customer desires, emerging trends, infrastructure development, and a shifting preference for sustainable luxury cars,” Makarchuk said.

Makarchuk said there is an insatiable appetite for luxury goods, especially among the Nigerian middle class, who see cars as luxury goods despite the difficulties.

He listed the market leaders with over 60 percent contribution to the luxury cars ads on Jiji to include Mercedes-Benz, Lexus, Toyota and Land Rover.

“Luxury goods consumers prioritise symbolic consumption to showcase their success. Thus, luxury cars have become a statement of achievement, a tangible manifestation of one’s income power, and social standing in a competitive society where appearances matter,” he said.

Makarchuk said Nigerian consumers are looking for relatively affordable cars that provide a comfortable and luxurious driving experience while delivering durability, fuel efficiency, and high performance on the road.

Citing an example, he said the demand for SUVs in Nigeria has skyrocketed in recent years due to customers’ desire for vehicles with more space and versatility and cars suitable for the country’s challenging road conditions.

“The purchasing patterns in Nigeria have led to a rich diversity in the luxury car market, catering to a wide spectrum of demographics, tastes, lifestyles, and budgets. In response, dealers are continually evolving to meet the needs of their clients,” Makarchuk said.

He pointed out that investment in infrastructure is also driving the growth of the luxury car market in Nigeria despite the rising inflation.

“Nigeria’s ambitious infrastructure projects like improved road networks and upscale residential developments are fueling the desire for high-end automobiles. Driving through neighbourhoods such as Banana Island, Lagos, Maitama, Abuja, and others exposes one to an array of luxury cars,” he said.

Another reason why demand for luxury will continue is the fact that the country is embracing sustainable luxury to meet customers’ preferences.

“Luxury car buyers in Nigeria are drawn to eco-friendly and fuel-efficient models that offer performance without harming the climate. For instance, Tesla’s electric vehicles and BMW’s i3 are gaining popularity in the Nigerian luxury car market due to their sustainability features,” he said.

Makarchuk called on stakeholders to hasten the process of infrastructural provisions for EV charging points in the country as only a few charging stations exist like the NADDC stations in Lagos and Sokoto, as well as privately owned stations in-office and in-home.

He said luxury goods companies can be considered inflation-proof as consumers are willing to pay the premium.

“While this strong standing may be challenged in the future if the inflation rate continues its hike, the high-end luxury market and major luxury brands remain less affected by the rates compared to the rest of the market.

“Available data shows that Nigerians’ love for luxury automobiles shows no signs of slowing down. It’s no wonder the car upgrades business is also in its booming season – old model, upgraded body,” he said.

Makarchuk said platforms like Cars45, Carmart, and Jiji are making access to affordable cars easier as the industry continues its upward trajectory, defying odds and charting a course of steady growth.

He described the report as a wake-up call for car dealers, investors, car loan financiers, and other automotive industry players to double up efforts to be better prepared for growth.