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 is increasing, signifying a growing rise in the demand for Chinese cars, especially for official use.
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/liter to between N595 and N630/liter 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 China 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.
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.
Source: Business Day
