Nigerians imported fewer passenger automobiles in 2024 since the cost of importing vehicles increased dramatically due to rising inflation and the rapid naira depreciation, which made foreign exchange more expensive.
According to the National Bureau of Statistics (NBS) ‘s most recent foreign trade report, passenger automobile imports totaled N1.26 trillion in 2024, down 14.3% from N1.47 trillion in 2023.
Following a spike in imports the year before, when car imports more than doubled from 2022, the fall occurred.
Imported cars were among the most severely impacted by the harsh economic realities of 2024, which compelled individuals and businesses to reduce their spending on non-essential items.
The downturn reflects a change in consumer behavior; as the cost of new and imported used automobiles skyrocketed, many Nigerians resorted to the local second-hand car market.
What The Data Indicates
Economic cycles, currency volatility, and changing governmental regulations have all had a major impact on Nigeria’s passenger automobile import trends during the last five years. Vehicle imports to the nation totaled N546.79 billion in 2020 and N695.40 billion in 2021.
However, due to rising demand and auto dealers’ inventory accumulation, imports fell somewhat to N655.69 billion in 2022 before rising by 124.7% to N1.47 trillion in 2023. The previous year’s surge was reversed in 2024, with a steep 14.3% decline to N1.26 trillion, indicating the growing influence of economic instability on consumer spending.
What To Note
Rising inflation was one of the main causes of this downturn since it reduced purchasing power and raised the cost of expensive items like vehicles. In 2024, Nigeria’s headline inflation rate increased from 34.6% in November to 34.8% in December, marking a nearly three-decade high. The average annual inflation rate in 2024 was 33.2%, a significant rise from the 2023 rate of 24.7%.
Due to rising consumer costs, many Nigerians emphasized necessities over expensive purchases like cars. The demand for imported cars thus slowed as potential purchasers postponed their purchases or acquired used cars instead.
Simultaneously, the naira’s depreciation made the auto industry even more complex and made importing cars much more costly. At the end of 2024, the official exchange rate between the naira and the US dollar was N1,535/$, a 40.9% decline from N907.11/$ at the end of 2023. The naira fell 26.8% in the parallel market, from N1,215/$ at the end of 2023 to N1,660/$ today.
In 2024, the World Bank named the naira one of the worst-performing currencies in Sub-Saharan Africa, pointing to the Central Bank of Nigeria’s (CBN) delayed forex disbursements, increased demand for US dollars, and restricted foreign exchange inflows as the main causes of the currency’s depreciation. The research also noted that the naira’s depreciation has worsened by the demand for foreign exchange from money managers, non-financial end users, and financial organizations.
The cost of foreign exchange continues to be a significant barrier for industries that depend on imports, even after the CBN introduced new forex policies to improve market transparency and draw international investment. The sharp decline in the naira’s value made currency much more costly, increasing the price of imported cars and deterring many dealers from bringing in fresh inventory.
