High inflation, forex scarcity slash Nigeria’s car imports by 14.3%

Used vehicles in Nigeria account for the majority of car imports, with their value fluctuating over the years due to policy changes, foreign exchange rates, and shifting demand.

The primary sources of Nigeria’s imported vehicles are the United States, Italy, Belgium, Germany, and Canada.

Despite government efforts to reduce import reliance through increased tariffs and duties, the market remains robust, driven by strong demand from ride-hailing services like Uber and Bolt.

In 2024, Nigeria saw a decline in passenger car imports as inflation and naira depreciation made foreign exchange more expensive, driving up vehicle import costs.

According to The Punch, citing data from the National Bureau of Statistics, the total value of passenger car imports fell by 14.3% from ₦1.47 trillion in 2023 to ₦1.26 trillion in 2024.

This decline follows a sharp surge in vehicle imports in 2023, when imports more than doubled compared to 2022.

However, the economic realities of 2024—rising inflation, forex scarcity, and weakened purchasing power—forced businesses and consumers to cut back on non-essential purchases, with imported cars among the most affected.

Despite the drop in imports, Nigeria continues efforts to develop its automotive industry. The government introduced the National Automotive Industry Development Plan (NAIDP) to boost local production and reduce reliance on imports.

Domestic manufacturers like Innoson Vehicle Manufacturing (IVM) have been producing vehicles, but large-scale exports remain limited.

Nigeria’s economy faced significant inflationary pressures in 2024, with the inflation rate skyrocketing to 34.60% in November and December.

This sharp increase surpassed the previous year’s average inflation rate of 24.52%.

Food inflation was a primary driver, surging to 39.84% in December 2024, a 5.91% increase from the 33.93% recorded in December 2023,

This was attributed to rising import costs, currency depreciation, and structural bottlenecks such as poor infrastructure and high energy costs.

The naira’s depreciation and increasing import costs have led to a dramatic surge in vehicle prices, making new cars unaffordable for many Nigerians.

The elimination of fuel subsidies in 2023 further strained the market, with consumers prioritizing fuel-efficient vehicles, particularly used sedans, over SUVs and multipurpose vehicles.