Nigeria’s car imports decline amid economic pressures

• Published On: 12 March 2025 at 07:09

Nigeria saw a significant drop in passenger car imports in 2024, as rising inflation and the sharp depreciation of the naira raised the cost of foreign exchange, making vehicle imports more expensive.

According to the National Bureau of Statistics' most recent foreign trade report, the total value of passenger car imports fell 14.3% to N1.26 trillion in 2024, down from N1.47 trillion the year before. This downturn comes after a sharp increase in vehicle imports in 2023, which more than doubled from 2022.

The drop in automobile imports reflects the broader economic challenges that impacted consumer spending in 2024. Rising inflation and currency depreciation prompted many Nigerians to reduce non-essential purchases, with imported vehicles being among the hardest hit. As prices for brand-new and foreign-used vehicles skyrocketed, consumers turned to the local used car market.

Nigeria's passenger car import trends have fluctuated over the last five years as a result of economic cycles, currency volatility, and changing government policies. While imports totaled N546.79 billion in 2020, they increased to N695.40 billion in 2021 before falling slightly to N655.69 billion in 2022.

However, in 2023, imports increased by 124.7% to N1.47 trillion, owing to increased demand and stockpiling by auto dealers. The subsequent 14.3% decline in 2024 marks a reversal of that trend, highlighting the growing economic strain on consumers.

Soaring inflation eroded purchasing power and made high-value items like cars less affordable, contributing significantly to the downturn. Nigeria's inflation rate rose to a nearly three-decade high of 34.8% in December 2024, from 34.6% in November. On an annual basis, inflation averaged 33.2% in 2024, up from 24.7% in 2023.

As living costs rose, many Nigerians prioritized essential expenses over large purchases, slowing demand for imported vehicles. Many buyers postponed their purchases or opted for more affordable, locally available used vehicles.

Simultaneously, the naira's sharp depreciation complicates vehicle imports. The official exchange rate closed at N1,535 per US dollar in 2024, down 40.9% from N907.11 at the end of 2023. The naira fell by 26.8% on the parallel market, trading at N1,660/$ compared to N1,215/$ a year ago.

The World Bank ranked the naira as one of the worst-performing currencies in Sub-Saharan Africa in 2024, citing high demand for dollars, limited forex inflows, and delays in foreign exchange disbursements by the Central Bank of Nigeria. While the CBN implemented new forex policies to increase market transparency and attract investment, foreign exchange rates remained high, discouraging auto dealers from importing new inventory.