The Decline of Car Affordability for Working-Class Nigerians

The article discusses the deteriorating accessibility of car ownership for working-class Nigerians, reflecting broader economic challenges. It highlights a shift from new and imported used cars to Nigerian-used vehicles, which often lack quality yet are seen as the only available option due to rising costs. Insights from auto dealers reveal that inflation, high tariffs, and foreign exchange issues are exacerbating affordability problems, with calls for government intervention to alleviate the situation.

The reality of car ownership in Nigeria reflects a troubling economic landscape for the working class. During a recent corporate training session, a facilitator reminisced about purchasing a new Volkswagen Beetle for merely N3000 during the late 1970s, an era when fresh graduates often received cars as part of their employment incentives. However, the current economic climate has rendered such ownership aspirations increasingly unattainable.

The shift from imported used cars to Nigerian-used cars marks a significant change in the market, driven by economic challenges and the depreciation of the Naira. Outfits like Car45, Automania, and CarsToday now dominate the sphere, catering to individuals who can no longer afford new vehicles. Buyers are often confronted with lower-quality vehicles available for purchase in various informal settings, such as streets and mechanic workshops.

Nigerian-used cars, while more affordable than their imported counterparts, frequently exhibit poor conditions due to neglect and insufficient maintenance. For instance, a second-hand Toyota RAV4 from 2003 can range from N4 million to N7 million, which is substantially high considering the vehicle’s age and condition. The increasing prices of both Nigerian and fairly-used cars continue to push car ownership further out of reach for the working class.

Dealers like Nuhu Ismaila have shifted focus to selling Nigerian-used cars amid rising prices for imported options. He emphasizes the need for affordability, noting that civil servants comprise his primary clientele, frequently trading in old cars for Nigerian-used versions. Marcelo Gemade, a legal professional, echoes this sentiment, illustrating how the economic crisis makes these vehicles the only viable option for many.

Johnson Eremuye, a dealer in Lagos, connects inflated car prices to increased tariffs and foreign exchange instability. He argues that the government’s tariffs on imports contribute significantly to the already hefty price tags, compelling many to seek more cost-effective alternatives through the burgeoning market for Nigerian-used cars. As costs for Tokunbo vehicles have tripled, affordability remains a pressing issue for many potential buyers.

Izuchukwu Ezeokoli warns of the risks involved in auto dealing today, given the soaring exchange rates coupled with restrictive import costs. He predicts continued price rises as the economic situation fails to stabilize. Solutions suggested by economist Olushola Adenuba include fostering favorable automotive policies to encourage local assembly and improving the affordability of vehicles for the average Nigerian.

The rising costs of living and the greater number of graduates competing for limited job openings further complicate the landscape. Such realities have diminished the allure of previous generations where cars were provided as an incentive to attract top talent. Observers suggest that the government’s lack of forward-thinking economic strategies is largely responsible for current hardships, underscoring a need for progressive reform to improve future prospects for car ownership, akin to the better days of the past.

In summary, the cost of car ownership in Nigeria has escalated, with economic decline and foreign exchange challenges driving many buyers towards Nigerian-used cars. Unfortunately, these vehicles often lack quality. Observations from industry players reveal a shift in market dynamics, where affordability has never posed a greater challenge. The government’s policies and broader economic conditions will critically shape the future of automobile accessibility in Nigeria.

Original Source: businessday.ng