Nigerians imported fewer passenger cars in 2024 as rising inflation and the sharp depreciation of the naira made foreign exchange more expensive, significantly increasing the cost of vehicle imports.
The latest foreign trade report from the National Bureau of Statistics (NBS) showed that the total value of passenger car imports fell by 14.3% to N1.26 trillion in 2024, down from N1.47 trillion in 2023.
The decline followed a surge in imports the previous year when vehicle importation more than doubled compared to 2022.
However, harsh economic realities in 2024 forced both businesses and consumers to cut back on non-essential purchases, with imported vehicles among the most affected.
The downturn reflects a shift in consumer behavior, as many Nigerians turned to the local second-hand car market due to skyrocketing prices of brand-new and foreign-used cars.
What the data says
- Over the past five years, Nigeria’s passenger car import trends have fluctuated significantly, largely influenced by economic cycles, currency volatility, and shifting government policies. In 2020, the country imported N546.79 billion worth of vehicles, which increased to N695.40 billion in 2021.
- However, imports declined slightly to N655.69 billion in 2022 before soaring by 124.7% to N1.47 trillion in 2023, fueled by increased demand and inventory buildup by auto dealers. The sharp 14.3% drop to N1.26 trillion in 2024 marks a reversal of the previous year’s boom, reflecting the deepening impact of economic instability on consumer spending.
What you should know
One of the key drivers of this decline was soaring inflation, which eroded purchasing power and made high-value goods, such as cars, less affordable. Nigeria’s headline inflation rate hit a nearly three-decade high in 2024, reaching 34.8% in December compared to 34.6% in November. On an annual basis, average inflation stood at 33.2% in 2024, a sharp increase from 24.7% recorded in 2023.
With consumer prices rising persistently, many Nigerians prioritised essential expenses over big-ticket purchases like vehicles. As a result, prospective buyers either delayed their purchases or opted for second-hand vehicles, causing a slowdown in the demand for imported cars.
At the same time, the depreciation of the naira further complicated the auto market, making it significantly more expensive to import vehicles. The official exchange rate between the naira and the United States dollar closed in 2024 at N1,535/$, reflecting a 40.9% depreciation from N907.11/$ at the end of 2023. In the parallel market, the naira depreciated by 26.8%, trading at N1,660/$ from N1,215/$ at the close of 2023.
The World Bank listed the naira among the worst-performing currencies in Sub-Saharan Africa in 2024, citing strong demand for U.S. dollars, limited foreign exchange inflows, and delays in forex disbursements by the Central Bank of Nigeria (CBN) as key drivers of its weakness. The report also pointed out that demand for forex from financial institutions, non-financial end-users, and money managers has exacerbated the naira’s depreciation.
Despite the CBN’s introduction of new forex policies aimed at enhancing market transparency and attracting foreign investment, the cost of foreign exchange remains a major constraint for import-dependent sectors. The steep drop in the value of the naira made forex significantly more expensive, driving up the cost of imported vehicles and discouraging many dealers from bringing in new stock.
