All is not well with Nigeria’s automobile market and this for real. As Nigeria’s economy continues to struggle, the automotive industry has continued to nosedive, and the first quarter performance of the sector does not reflect that there will be a silver lining in the sky any time soon.
A look at the first quarter of 2017 according to Kunle Ade-Ojo, Managing Director of Toyota Nigeria Limited while speaking at the quarterly media chat with the motoring journalists in Lagos, disclosed that import figures from the Nigerian ports came to about 350 units compared with about 3,500 units that came in under the same period last year, representing a dismal 90 percent drop in imports between 2016 and 2017 first quarter.
A breakdown of the 2016 performance indicates that in terms of sales, over all, there were no significant changes. In 2016, retail sales went down from 32,000 units in 2015 to about 18,000 last year, showing a market drop of 42 percent.
For Toyota, the brand went down from 8,000 units in 2015 to slightly about over 4000 units in 2016 which represents a drop of 35 percent when compared to the same period under review last year. With the drop, Toyota Nigeria Limited grew its share from 24 percent in 2015 to about 26 percent in 2016.
A review of what came into the country showed that imports dropped to about 60 percent to about 18,000 units in 2015 to just close to 7,000 in 2016. In terms of share of the imports, Toyota has about 43 percent in 2015, but the figure dropped to about 38 percent in 2016.
This trend according to the managing director was basically as a result of different stocks holding from different manufacturers and automobile distributors in the country. In addition to that, the scarcity of foreign exchange significantly affected businesses last year and that caused the major reduction in importation.
In 2016, the devaluation of the naira significantly impacted negatively on sales which led to the doubling of prices of vehicles as a result of the escalating value of the exchange rate of the naira against the dollar last year against the dollar.
He regretted that as a result, a lot of businesses could not afford to pay for the increase because quite a good number of them were struggling to survive under the harsh economic environment. Some of the fleet buyers he noted have to retrench last year as a result of the tough economic situation.
To remain afloat in the midst of uncertainties, companies have to prioritize on what they will spend their limited funds on. In his submission, ‘’Vehicles as you are generally luxury apart from the ones that are used for businesses which are commercial vehicles and that is why commercial vehicles performed more last year’’.
Kunle Ade-Ojo disclosed that, commercial vehicles accounted for about 70 percent compared to 30 percent for the passenger segment in terms of ratio. As a result, passenger cars reduced more than commercial vehicles due majorly to the 70 percent duty on passenger cars as compared to 35 percent on the commercial segment.
This high duty differential between the two segments makes the impact more significant on the commercial segment than passenger vehicles and most companies have also extended the number of years that their staff can use their official vehicles from four years to between five and six years before they will consider changing their staff vehicles.
He continued, ‘’In terms of retail sales, Toyota Nigeria is estimating based on the information we have that the market did about 2000 retail sales in 2016 compared to about 5000 achieved under the same period in 2015, bringing it to a drop of about 50 percent in terms of retail sales’’.
Among the retail sales, Toyota estimates a share of 23 percent of first quarter sales. Kunle Ade-Ojo stated that Toyota Nigeria Limited regrets that foreign exchange has continued to remain a major challenge, worsened by interest rate that has gone up and banks that have raised interest rate duo to dollar scarcity. He regretted that even though, the naira has moderated from a high of about N520 to N400 to the dollar, it is still not available.