How Forex fluctuations affect car sales

Julius Bwala, a car dealer in Kaduna, has been selling used cars for years. But a latest development put him off balance. Used to travelling to Cotonou in Benin Republic, to import vehicles known as ‘Belgium’, he saw things had changed. He explains that it’s all about Foreign exchange trading. “The CFA has increased to […]

Julius Bwala, a car dealer in Kaduna, has been selling used cars for years. But a latest development put him off balance. Used to travelling to Cotonou in Benin Republic, to import vehicles known as ‘Belgium’, he saw things had changed.
He explains that it’s all about Foreign exchange trading. “The CFA has increased to over six hundred,” he says, adding that a Toyota Corolla which was sold at N1.3m has risen to between N1.8m and N1.9m.
With the present situation, dealers are now more flexible and even compromise terms of purchase. “Now, people don’t buy cars. I sold a Belgium car two weeks ago and the person didn’t pay all. He paid N1.5m and still owes me N200, 000,” Bwala reveals. And he is not alone.
Recently, vehicle sales by dealers and importers dropped significantly due to increase in prices caused by a rise in exchange rate. So, while prices of brand new vehicles have increased by 70 per cent, fairly used ones upped by 35 per cent.
A survey by Daily Trust indicated that a Toyota Corolla is now sold at N10m from N6.5m and N7.5m, a Prado SUV which used to be N14m and N13m is now priced at over N20m.
A vehicle importer, Femi Olawale, said prices of most fairly used vehicles increased because of the increment in the cost of clearing and duty. But, another dealer, Sanusi Yahaya, who specialises in selling off used cars brought to him by owners lamented that cars are available for sale but those who need them lack purchasing power. On the other hand, those that have the money are focusing on more pressing economic needs. “A 2001 Toyota Camry can go for as low as N500, 000, a Corolla LE for about N900, 000. The most recent car I sold was a Corolla Le at the price of N750, 000 and a Honda CRV 2007 model at N2m,” he says, adding that as far as second-hand cars are concerned there’s no increase in price, except for ‘Belgium’.
Managing Director of Toyota Nigeria Limited, Mr. Kunle Ade-Ojo, attributed the rise in price of automobiles to foreign exchange fluctuations, but still expressed optimism that the market would stabilise very soon.