A new report surfacing online has indicated that the used cars business in Nigeria will continue to thrive as more consumers settle for more affordable cars, since brand new cars are very expensive. The astronomical increase in the price of new cars has deterred many Nigerians from buying brand new cars, and going for the used ones instead.
In a report by Business Insider, prices of new cars in Nigeria has gone up by 15%. “According to a recent market analysis by Modor intelligence, the prices of new cars shot up extensively as of July 2023 as a result of the devaluation of the naira and the increase in exchange rates for clearing imports, which has had approximately a 15% impact on the prices of new cars.
“Since then, consumers have shifted their preference towards availing imported used cars, especially “Tokunbos,” which are popular for their affordability and reliability. Additionally, the emergence of online auto platforms has made it easier for consumers to access vehicle information, compare prices, and make informed decisions when purchasing a used car.
“More buyers are opting for online platforms like Cars45, Carmart, and Jiji to browse, negotiate, and finalise deals,” the report noted.
Market Analysis for Used Cars in Nigeria
The report further projected that the used car market in Nigeria, currently valued at USD 1.14 billion, is anticipated to surpass a net valuation of USD 1.74 billion, registering a CAGR growth of 8.9% in 2024.
This is partly due to the price of Tokunbo cars, which increased by almost 100% after the Nigeria Customs Service (NCS) in June 2023 increased the import duty on vehicles from 39.45% to 39.62% to reduce the dependency on imported cars while promoting the domestic manufacturing sector.
Following the announcement, it was estimated that a 2005 model of the Toyota Corolla that sold for an average price of Naira 1.9 million (USD 2,519) in 2021 was being sold at Naira 4 million (USD 5,305) in June 2023, while a 2004 Honda Accord of Naira 1.6 million (USD 2,122) on an average was being sold at an average price of Naira 2.9 million (USD 3,846).
Another interesting insight from the report showed that used sedan vehicles remained the preferred choice of consumers willing to purchase used cars in the Nigerian market, thanks to their lower price compared to their sports utility vehicles (SUVs) and multi-purpose vehicles (MPVs) counterparts. Some of the top-selling used sedan models in Nigeria were the Toyota Corolla, Toyota Camry, and Honda Accord, among others, as of June 2023. It is also not a strange sight to see used cars for sale in Nigeria by owner. Those are private vehicles that the owner wants to sell as an individual, and not as a company. These cars are usually way cheaper, because the owner may be in need of money, and the price wil definitely be cheaper than that bought at a car stand. But there are attendant risks involved in buying used cars from individual owners.
Some of those cars may be faulty, and the owner may not be sincere enough to tell the buyer what is wrong with the car. That’s why it’s advisable to always go with an experienced mechanic to check the car before you make payment. Also, the car may be a stolen car. Many people have ended up in police net after buying stolen cars. That is not to say you can’t get good cars from private owners. You can. But do your due diligence.
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