Prices of imported second hand automobiles, popularly known as Tokunbo vehicles, have soared in the last couple of months due to exchange rate and port charges.
According to a report by the Guardian, the prices of importted used vehicles and new cars in the country have tripled due to high clearing fees and processing, high duty, freight rate, security surcharges and insurance on Nigeria-bound cargoes.
Also, unfriendly ports environment, continuous restriction on importing used vehicles through the neighbouring borders and illegal charges of government agencies, now worsened by high exchange rate.
A survey of current prices of vehicles show that Toyota Camry 2004, which should ordinarily go for N1.6 million now sells for between N1.9 million and N2.1 million; Toyota Camry 1999/2001 sold before at N1.4 million presently cost N1.8 million; Honda EOD, which sold for N1.4 million before is now N1.9 million to N2 million; Toyota Corolla 04/05 sold for N1.9 million is currently between N2.4 million and N2.5 million.
Toyota Sienna 1999/2000 before was N1.3 million but presently goes for N1.8 million to N2 million; Toyota Corolla 09/10, which was going for N2.4 million is now sold for N3 million; Lexus 330 2005 is now N2.4 million from its earlier price of N1.9 million and Lexus 350 06/07 is now N4 million as against N3.5 million.
Comparatively, prices of cars in neighbouring Benin Republic, Ghana and Togo have remained low and affordable to the average income earners, reason Nigerians throng these countries to purchase cars.
Also, Nigerian importers and foreigners divert their vessels to those countries due to the ease of doing business at their ports as well as cheap clearing fees, freight rates and affordable insurance.
For instance, in Benin Republic and Ghana, the prices of the aforementioned vehicles are cheaper. Toyota Camry 2000 is CFA 1,900,000 (N1,398,658.27); Honda EOD – CFA 1,400,000 (N1,030,590.30); Toyota Corolla 05 – CFA 1,800,000 (N1,325,044.67); Toyota Sienna 2000 – CFA 1,300,000 (N956,976.71); and Toyota Corolla 09/10 – CFA 3,500,000 (N2,576,475.76).
Another reason why the cost of used vehicles may spike in the coming months is due to imported inflation. Imported inflation is a rise in the cost of raw materials or finished goods imported from a country of origin that is experiencing high inflation.
The rising inflation on consumer goods in the United States is on the verge of triggering a wave of imported inflation into Nigeria, with a focus on used cars, a major imported item from the world’s largest economy.
Over 20 percent of Nigeria’s imports from the U.S. are used vehicles. On annual basis, Nigeria spends roughly N600 billion or $1.2 billion importing used cars from the United States alone, which is 90 per cent of its total used vehicle imports.