Naira Crash Fuels Used Car Rush: 10 Tokunbo Cars Nigerians Can Buy Under N5 Million
- Nigeria’s falling exchange rate has made Nigerian used cars more valuable due to their resale value
- A recent report shows that Nigerians now prefer Nigerian used cans to imported ones due to their resale value and maintenance costs
- Also, as the naira depreciates, there are used cars sold in Nigeria going for N5 million or less, especially from Nigerians moving abroad
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
As exchange rates fluctuate and inflation accelerates, the used car resale value is rising, making car ownership an asset.
Nigeria’s heavy reliance on imported cars, exchange rate volatility, and inflation have caused a rise in demand for used vehicles.
Source: Getty Images
Naira's crash drives up used car value
According to reports, car dealers in Nigeria said that the rising cost of used cars is primarily due to two factors such as exchange rates and import duty charges.
Data shows that in October 2023, the FX rate in the parallel market rose to N1,300 from N736 in January.
At the end of the year, the naira fell by 96.55% yearly, as the dollar was sold at N907.11 on December 29, 2023, relative to N461.61 at the end of 2022 at NAFEM.
At the end of last year, the exchange rate plummeted to N1,535 on December 31, showing a decline of N628 in a year.
Car dealers now prefer Nigerian used vehicles
BusinessDay quoted a car dealer as saying that as the naira weakens, the purchase cost and import duty for foreign used cars known as Tokunbo become higher.
Oluwafemi Ogunbadejo, a car dealer, disclosed that importing a 2010 Toyota Corolla could cost N9 million, with a resale value of N11 million, indicating a low profit margin and slow turnover.
However, locally used cars, especially from Nigerians moving abroad, can be purchased for N6 to N7 million and resold for N8 million, giving a quick sale and profit.
A new report by Cowrywise showed that while a car loses its value via depreciation, its replacement value in Nigeria increases over time.
Replacement cost of used cars is cheaper
The report listed cars as consumable assets that depreciate and do not earn income, but have a high resale value in naira and can rise due to weaker naira and inflationary pressures.
The development allows Nigerians to take advantage of higher replacement costs when selling their cars.
Per the Cowrywise report, despite depreciation, depreciation value can offer partial upside.
The Tokunbo cars Nigerians prefer
Due to Nigeria’s heavy reliance on imports, exchange rate fluctuation and inflation can accelerate the cost of replacing vehicles.
The report disclosed that based on current trends, the annual increase in replacement cost of a used vehicle is about N1.73 million yearly, and N144,473 monthly.
The development means that although a car loses its value, it may still have a higher replacement cost over time, making it a partial buffer against inflation, the report stated.
A prior report by Legit.ng disclosed that fairly used or second-hand cars imported from countries like the US, Canada, or parts of Europe are referred to as "tokunbo" in Nigeria.
Source: Getty Images
10 used vehicles Nigerians can buy with N5m
Many believe that these vehicles are often in better condition than locally used ones and are typically less expensive than brand-new models.
- Toyota Solara (2003–2004) – The Sporty Coupe
- Hyundai Santa Fe (2004)
- Nissan Micra (2002)
- Honda Civic (iRobot – 2006–2011)
- Toyota Camry (2002–2006) – “Big Daddy”
- Hyundai Accent (2006)
- BMW E46 (1998–2005)
- Honda Pilot (2004–2005)
- Danfo (Commercial Bus)
- Mazda Tribute (2004–2005)
Toyota offers cars at discounted rates
Legit.ng earlier reported that Toyota Nigeria Limited announced plans to introduce two new hybrid electric vehicles into the Nigerian market before the end of 2025.
The fuel-efficient vehicles would be key to helping Nigerians cope with tough economic headwinds and support the federal government’s plans to transition the country away from fossil fuels to green energy.
Read also
NNPC filling station crash petrol price below N900/litre after Dangote partners reduce cost
The managing director of Toyota Nigeria Limited, Kunle Ade-Ojo, disclosed these plans at a press conference during the motor show on Thursday in Lagos.
This article has been updated by the head of business desk, Victor Enengedi, with additional information.
Source: Legit.ng
