Why Brand New Cars Are So Expensive in Nigeria

A Simple Explanation

Yesterday, I posted the latest prices for Brand new Kias in Nigeria on Twitter, and it got a little infected (viral).

https://twitter.com/gbenro/status/1646467465751273473

If you are a Nigerian who loves cars, you might have wondered why brand-new cars are now so expensive in Nigeria. You might have seen some sleek models on the internet or in foreign movies and wished you could own one. But when you check the prices online or at the local dealerships, you are shocked by how high they are. Why is that?

There are many factors that contribute to the high cost of brand-new cars in Nigeria.

Here is a simple list:

- Import duties and taxes: Nigeria is a net importer of cars, which means it relies on other countries to supply its car market. This means that every car that enters the country has to pay import duties and taxes to the government. These charges can be as high as 70-77% of the car's value, depending on the type and age of the car. This makes the car more expensive for the buyer.

- Exchange rate: The Nigerian currency, the naira, has been depreciating against major foreign currencies like the US dollar and the euro for years. This means it takes more naira to buy a car priced in dollars or euros. For example, if a car costs $20,000 in the US, it would cost about N14 million in Nigeria at the current exchange rate of roughly N700 to $1. But a few years ago, when the exchange rate was N200 to $1, the same car would have cost N4 million. This is self-explanatory.

- Inflation: Inflation is the general increase in the prices of goods and services over time. Nigeria has been experiencing high inflation for a while, which means that the purchasing power of the naira is eroding. This means that it takes more naira to buy the same amount of goods and services as before. This also affects the price of cars, as they become more expensive in naira terms.

- Demand and supply: The demand and supply of cars also affect their prices. Nigeria has a large population of over 200 million people, and the supply of cars is severely limited by import restrictions, poor infrastructure, and low local production. This creates a situation where there are more buyers than sellers, which drives up the prices.

- Quality and features: Another factor that affects the price of cars is their quality and features. Brand-new cars are usually more reliable, durable, and efficient than used cars. They also come with more advanced features such as navigation systems, etc. These features enhance the safety, comfort, and performance of the car. However, they also add to the cost of production and maintenance of the car.

The last thing I want to mention here is the:

- National Automotive Policy: Nigeria's National Automotive Policy is a set of guidelines and strategies created by the Nigerian government to encourage the development of the country's automotive industry.

The policy aims to achieve this by implementing measures such as the imposition of higher taxes on imported vehicles, providing incentives for local production of vehicles, and creating a favorable business environment for automobile manufacturers to invest in Nigeria.

The policy also seeks to create jobs and reduce the country's reliance on imported vehicles by promoting local production of vehicles, which will also help to boost the country's economy.

Overall, Nigeria's National Automotive Policy is designed to create a more self-sufficient and sustainable automotive industry in Nigeria, while also benefiting the country's economy and people.

I will write a little more about this later.

These are some of the reasons why brand-new cars are so expensive in Nigeria. If you want to buy a brand-new car in Nigeria, you must be prepared to pay a premium for it. Alternatively, you can opt for a used car or a locally assembled car, which might be cheaper and more accessible. However, you must be careful about their quality and condition.

Whatever you choose, make sure you do your research and compare prices before you make a purchase.

Grace to you.