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Car sales drop as prices rise by 20%

By on June 12, 2015

Automobile dealers in Nigeria are bracing for a dip in vehicle sales for the rest of the year as indications have emerged that many of them may not meet their targets for 2015, no thanks to an increase of about 20 per cent in the prices of vehicles.

Although about 26 firms have signified intention to set up auto assembly plants in the country, with some already in operation, the prices of brand new vehicles have yet to come down as promised by the Federal Government when it imposed a 70 per cent tariff on imported cars in September 2013.

Rather, the prices of new cars, according to findings by our correspondent, have further gone up.

This, it was learnt, was due to the full implementation of the new auto policy introduced in September 2013 by the government to encourage local assembly and production of vehicles.

The implementation of the new tariff was delayed for more than a year after several appeals to the government by auto industry operators.

A marketing manager of one of the major car dealers, who spoke on the condition of anonymity, said virtually all dealers had upwardly adjusted their prices, adding that it cut across all vehicle segments.

He said, “The price increase cuts across most of the franchise holders, including the market leader, Toyota.

“For instance, a Kia Picanto manual transmission, which cost N1.96m in January this year, is now being sold for N2.39m.”

A price list for Toyota brand of vehicles obtained by our correspondent on Wednesday showed that the Yaris, previously offered for between N3.2m and N3.48m, was now being sold for between N4.5m and N4.8m.

The price of Corrolla 1.8 GLi, which went for N4.67m in the early part of the year, has been increased to N5.74m. The prices of a new Corolla 1.8L fabric and leather seat were given as N7.2m and N8.3m, respectively.

The price of a Toyota Land Cruiser Prado VX, which before now was N15m, has risen to N18m.

Honda and Hyundai have also increased the prices of their vehicles being sold in Nigeria. The two brands, along with about six others, including Nissan and Volkswagen, are under the franchise of the Stallion Auto Group.

The new prices of Honda vehicles indicate that the City is now being sold for between N4.695m and N5.095m; the Accord is offered for N9m to N10.25m; while the Pilot is pegged at N12.5m.

Another volume-driven brand is Hyndai. A copy of the price list obtained on Wednesday showed that the Accent was being offered for between N3.495m and N4.195m; the Elantra has a price tag of N4.395m to N4.795m; while the Sonata commands N5.195m to N6.395m.

The Managing Director, Stallion Auto Group, Mr. Parvy Singh, however, said the firm had not increased the prices of its Nissan brands.

But the company may have been riding on the back of the benefits being derived from the local Nissan assembly plant established last year.

The Nissan subsidiary of the Stallion Auto Group, which started with the local assembly of the Patrol (jeep) last year, has reportedly gone into the production of Almera and a number of other models in Nigeria. The company is said to be enjoying a considerable slash in import duty on its imported vehicles as well as zero tariff on Completely Knocked Down units.

The Federal Government had stated in a document released last year, with reference number BD/FP/DO/09/189, “Local assembly plants shall import completely knocked down (vehicles) at zero per cent duty; and semi-knocked down (vehicles) at five per cent duty.

“Local assembly plants shall import fully built unit cars at 35 per cent duty and 20 per cent for commercial vehicles without levy, respectively in numbers equal to twice their CKD/SKD kits.”

Imported used vehicles, popularly called Tokunbo, are not spared in the new tariff regime as the same rates will apply, according to the government’s directive on the auto policy.

 

[Punch]