Nigeria Used Car Market Size

Nigeria Used Car Market Analysis

The Nigeria Used Car Market size is estimated at USD 1.14 billion in 2024, and is expected to reach USD 1.74 billion by 2029, growing at a CAGR of 8.90% during the forecast period (2024-2029).

Consumers' preference towards availing imported used cars, namely, "Tokunbos," the emergence of online auto platforms, and increasing new vehicle prices serve as the major determinants for the growth of the used car market in Nigeria. The prices of new cars shot up extensively as of July 2023 because of the devaluation of the domestic currency, the naira, and the increase in exchange rates for clearing imports, which has had approximately a 15% impact on the prices of new cars.

The spike in new vehicle prices deters some of the customers from purchasing brand-new vehicles, subsequently leading to the surging demand for used cars in Nigeria. Further, consumers' growing concerns about high inflation, which rose to 24.08% in July 2023 compared to 22.79% in June 2023 owing to the decline in GDP due to falling oil production, is also acting as a catalyst for the falling demand for new cars in Nigeria.

One of the major challenges faced by the used car market is the increasing used car prices across Nigeria, attributed to the hike in tariff by the Nigerian Customs Service in 2022. It is estimated that the price of Tokunbo cars has increased by almost 100% in the Nigerian used car market as of July 2023.

Cars like the Toyota Corolla, Camry, and Honda Accord were priced over Naira 1 million (USD 1,325) higher than their old prices before the customs duty for importing used cars in Nigeria was increased. The Nigeria Customs Service (NCS) in June 2023 further increased the import duty on vehicles from 39.45% to 39.62% to reduce the dependency on imported cars while promoting the domestic manufacturing sector.

Following the announcement, it was estimated that a 2005 model of the Toyota Corolla that sold for an average price of Naira 1.9 million (USD 2,519) in 2021 was being sold at Naira 4 million (USD 5,305) in June 2023, while a 2004 Honda Accord of Naira 1.6 million (USD 2,122) on an average was being sold at an average price of Naira 2.9 million (USD 3,846).

The government's aggressive strategy to promote the electrification of vehicle fleets to promote the reduction in carbon emissions will aid the demand for used cars across Nigeria during the forecast period. Consumers who are willing to purchase cheaper alternatives to new-energy vehicles are increasingly adopting the purchase of used vehicles for convenience in mobility. For instance, in August 2023, Nigeria's Ministry of Transportation announced its ambitious plan to acquire a fleet of electric cars to improve transportation effectiveness and address rising concerns about fuel costs.

The strategy aims to help lower the high transportation costs that have resulted from the removal of fuel subsidies. Even with the aggressive stance of the Nigerian government to promote the adoption of EVs, the higher cost of electric vehicles adds to the financial burden of the consumer attributed to its excessive battery cost, thereby, in turn, making consumers opt for used cars in the coming years.