Nigeria’s Car Imports Plunge as Economic Pressures Mount
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Nigerians imported significantly fewer passenger vehicles in 2024 as soaring inflation and the persistent depreciation of the naira made foreign exchange costlier, driving up the price of imported cars.
Data from the National Bureau of Statistics (NBS) reveals that the total value of passenger car imports fell by 14.3% to ₦1.26tn in 2024, down from ₦1.47tn the previous year. This downturn follows a sharp surge in 2023, when vehicle imports more than doubled compared to 2022.
The stark reversal reflects the grim economic realities of 2024, with businesses and consumers curbing non-essential purchases. Imported vehicles—both new and used—have been among the hardest hit, as financial constraints forced many Nigerians to either delay purchases or opt for locally sourced second-hand alternatives.
Inflation and Exchange Rate Crisis Squeeze Consumers
One of the primary drivers behind the slump in car imports is Nigeria’s worsening inflation crisis. The country’s inflation rate soared to a near three-decade high of 34.8% in December, up from 34.6% in November. The average inflation rate for the year stood at 33.2%, significantly higher than the 24.7% recorded in 2023.
With purchasing power eroded and disposable incomes stretched thin, big-ticket items such as cars have taken a back seat. Households have prioritised essentials, while businesses, grappling with rising operational costs, have also pulled back on fleet acquisitions.
The depreciation of the naira has further compounded the crisis. By the end of 2024, the official exchange rate stood at ₦1,535 per US dollar, marking a 40.9% drop from ₦907.11 at the end of 2023. In the parallel market, where many businesses source foreign currency, the naira fell even further, trading at ₦1,660/$1—down 26.8% from the previous year.
The World Bank ranked the naira among the worst-performing currencies in Sub-Saharan Africa in 2024, attributing its decline to a combination of limited dollar inflows, high demand in the parallel market, and delays in foreign exchange disbursements by the Central Bank of Nigeria (CBN).
Import Duties and Policy Shifts Deter Dealers
Beyond currency depreciation, Nigeria’s import policies have also contributed to the sharp decline in vehicle imports. High import duties and taxes on used vehicles have made car importation increasingly prohibitive.
Data from Ports & Terminal Multipurpose Limited (PTML), Nigeria’s leading roll-on-roll-off terminal, shows that vehicle imports dropped by a staggering 60% in the first half of 2024. PTML’s General Manager, Tunde Keshinro, attributed the decline to new levies and policy restrictions, which have significantly raised the landing costs of used cars.
“This unprecedented decline in the volume of used vehicle importation into Nigeria can be linked to high import duty and taxes, the imposition of import levies, and the restriction of rebates on ex-factory prices used for assessing import duties,” Keshinro explained.
Under new customs regulations, the rebate applied to import duties is now capped at 10 years, even though the law allows the importation of vehicles up to 12 years old. This means vehicles older than a decade face higher duties, making them unaffordable for many Nigerians.
The Comptroller-General of the Nigeria Customs Service, Adewale Adeniyi, echoed these concerns, revealing that car imports dropped by 45% in the first quarter of 2024 due to the foreign exchange crisis.
“This period was critical for Nigerians and businesses due to exchange rate volatility,” Adeniyi said. “Car dealers were heavily impacted, and we saw a 45% decrease in the volume of cars imported. Even regular imports suffered, as businesses could no longer afford to bring in raw materials.”
Bleak Outlook for 2025
Industry analysts warn that unless Nigeria’s economic fundamentals improve, vehicle imports may continue their downward trajectory in 2025. While the CBN has introduced several foreign exchange policies to stabilise the market and attract foreign investment, the effects remain uncertain.
For now, the combination of high import costs, a struggling currency, and waning consumer purchasing power means that for many Nigerians, owning a new car will remain out of reach.
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