Market News

Written by Yusuf Babalola

End users of used imported vehicles also known as Tokunbo, are yet to heave a sigh of relief despite reduction on Customs duty of imported used vehicles also known as Tokunbo, despite appreciation in the value of naira against the United States dollar.

LEADERSHIP reports that the cost of Tokunbo cars surged by over 100 per cent between May last year and last month, on the back of the naira woes against the dollar, pushing fairly used vehicles out of the reach of many potential buyers.

Fairly used cars are popular among the middle class and small businesses, with the United States of America and Germany being the main source to Nigeria.

However, the naira has appreciated significantly from N1,615/$1 on 15th March, 2024 to N1,251/$1 on Friday, 5th April, 2024.

Also, the Customs FX rate for computing  duty on imported cargo dropped from N1,515/$1 in March, 2024 to N1,251/$1 on Saturday, April 6, 2024.

Accordingly, while naira appreciated 22.5 per cent at the official market, Customs FX appreciated by 17.4 per cent in the last three weeks.

To this end, the cost of purchasing imported cargoes at the country of origin and import duty payment at Nigeria seaport have dropped drastically.

With this, end users demand reduction in prices of imported used items especially vehicles which has remained astronomically high.

We expect prices to be favourable in the coming months should the exchange rate maintain the current trend. The effect may be felt in the next few months, maybe one or two months from today,” Chukwu Innocent, a end user stated.

But, a visit to an online marketplace for sales of used and new vehicles in Nigeria, www.jiji.ng showed that sellers still maintained the price of vehicles before naira started gaining momentum.

For instance, a foreign used (Tokunbo), 2009 edition of RX 300 still maintained its old price of N11.5 million; 2007 RX 350 goes for N138.8 million; 2017 ES 350 goes for N27 million while 2012 Lexus 350 goes for N19.5 million.

Also, a 2010 Toyota Sienna sells for N14.4 million; 2013 Toyota Camry goes for N13.7 million; 1012 Toyota Corolla, N9.3 million; 2010 Toyota Venza is N10.5 million while a 2006 Toyota Corolla still maintained its N7 million price.

Mercedes Benz 2007 M class goes for N9.4 million; 2012 GLK 350 sells for N13.5 million; 2004 C230, N7.2 million; 2016 C300, N26.5 million and 2010 C300 sells foe N9.7 million.

Foreign used 2013 Honda Pilot goes for N14 million; 2006 Honda Pilot is N5 million while 2009 Honda Accord goes for N6.5 million and 2011 Honda Accord sells for N9.5 million.

Speaking to LEADERSHIP, the president, Association of Motor Dealers of Nigeria (AMDON), Prince Akinola Adedoyin, said it will take months before prices of foreign used vehicles can come down.

 According to him, while it takes months to import, vehicle dealers must sell off their old stock bought with high dollar rate before importing new stocks that will sell lesser.

“Well, you know that even if the dollar goes down, the goods bought within these high time needed to be sold before their could be a change. You also know that purchasing power has not been commensurate with the increase then. Also, when the dollar went up all vehicles that came in would be sold before the price can be reduced but people are expecting that once dollar drops today, the price should drop the next day but it doesn’t work that way because dollar rate has been rising since December to mid March before it started going down and buyers want price to reflect immediately that’s not the way to go,” Adedoyin stated. 

Adedoyin said the fairly use vehicle sector  controlled major sector of the economy because road transport is readily available to the masses

“Well, we should expect it to drop soon but don’t forget that except the new vehicles comes that is when it has the capacity of forcing down the prices of the old one still in stock because when new ones are coming in and the prices are low then it will definitely bring down the cost or you risk not selling even though one cannot give a timeline because it depends on purchasing power.

“Apart from three months that it takes to import, even that Importation depend on the cash crunch because some importers stopped importation and diverted into other businesses and our own sector controlled the major economy because in this country now, the road is the only available mode of transportation opened to millions of Nigeria so, whatever affect it, affect all the strata of the economy but we are hopeful that in the next few months, the price will come down,” Adedoyin told LEADERSHIP.

The president general, Berger Motor Dealers, Lagos, Chief Metchie Nnadiekwe, corroborated Prince Adedoyin, saying the price of fairly used vehicles are expected to drop in three months.

According to him, vehicles bought during the increase in exchange rate would be sold and new one will bring down the price.

“For me, the dollar rate has come down but we can’t expect the price to come down immediately because the vehicles on various stands are being bought during the high rate of dollar. What about the one we bought then? Do we sell at a loss?,” he asked rhetorically.

He continued, “We have to sell the way we bought and the new one we are buying will lower the price. But, I can assure you that  gradually, the price will come down. We also want it to come down because we are not enjoying it either. Customers are not buying vehicles now,” he lamented.

“Maybe in three months, when we receive new consignment that we ordered and after we sold the old one we have bought, the price will drop,” he stated.