Market Trends of Nigeria Used Car Industry
Rising Adoption of Digital Technologies Will Foster the Growth of the Target Market
- The adoption of advanced technology by tech-savvy young individuals, the emergence of e-commerce marketplaces, and the aggressive strategies employed by various companies to invest in online advertisements are driving the demand for used cars sold through online platforms. These platforms assist consumers in making informed decisions since comprehensive information about vehicles, such as make, model, kilometers driven, engine capacity, condition, etc., is readily available.
- Furthermore, the increasing internet penetration rates and rising urbanization rates across Nigeria contribute to the development of an efficient ecosystem in which vehicle owners can connect with buyers from different regions and facilitate a seamless online sales process without the need for physical visits.
- As of January 2022, the internet penetration rate in Nigeria stood at 51.0%, marking an increase from the 50.0% rate in 2021. According to the World Bank, the urbanization rate in Nigeria reached 53.52% in 2022, up from 50.34% in 2018. These consumers are highly tech-savvy, and most of them possess the financial means to make informed decisions when purchasing a vehicle for their mobility. Due to these factors, the online used car market in Nigeria is expected to experience significant growth in the coming years.
- To gain a competitive edge in the lucrative online used car market, numerous players across Nigeria are actively exploring cross-border sales opportunities, with a strong focus on importing Japanese and European used cars.
- With the increasing internet penetration and the use of online classified platforms for purchasing decisions, consumers can now buy second-hand cars from neighboring countries, which allows them to secure better prices for used car models. Nigerian companies also have the opportunity to expand their business presence by offering cross-border sales services to countries like Chad, Cameroon, etc., which can significantly enhance their business performance.
- Moreover, improved offerings, such as a vast number of photos and videos of used vehicles available on online platforms and easy access to online instant finance, insurance, and warranty services, are expected to further drive the demand for used cars in Nigeria in the years to come.
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Used Sedan Cars to Remain the Preferred Vehicle Type in Nigeria
- Based on vehicle type, used sedan vehicles remained the preferred choice of consumers willing to purchase used cars in the Nigerian market, attributed to their lower price compared to their sports utility vehicles (SUVs) and multi-purpose vehicles (MPVs) counterparts. Some of the top-selling used sedan models in Nigeria were the Toyota Corolla, Toyota Camry, and Honda Accord, among others, as of June 2023. Japanese, South Korean, and European make used sedan cars were the top choice of consumers in Nigeria.
- Rising petrol prices in Nigeria serve as a major catalyst for the growing demand for used sedan cars, as these types of vehicles offer better mileage performance than their SUV and MPV counterparts.
- According to Nigeria's National Bureau of Statistics, petrol prices per liter in Nigeria expanded with a CAGR of 2.6% between May 2022 and September 2022. In the first quarter of 2022. Moreover, it was reported that in the first quarter of 2022, the import of diesel or semi-diesel engines was valued at Naira 72.32 billion (USD 9.3 million), Naira 96.76 billion (USD 123.1 million) in the second, Naira 90.77 billion (USD 115.5 million) in the third quarter, and Naira 65.19 billion (USD 8.2 million) in the fourth quarter of last year, totaling Naira 325.05 billion (USD 413.8 million).
- Increasing import duty hike on vehicles, as announced by the Nigerian government in June 2023, impacts consumers' preference of purchasing used cars, which are as expensive as luxurious or high-end cars, which in turn would positively impact the demand for used sedan cars during the forecast period.
