Auto sales drop by 60%

The economic downturn has forced a drop in semi knocked down parts (SKDs) and fully built vehicles (FBUs) imports by 60 per cent.

Automobile sales by makers and dealers have also gone down by 50 per cent, with Nigerians focusing more on food and cutting cost on luxuries.

This situation has pushed automakers into focusing more on after sales, as many Nigerians would rather have their old vehicles maintained than buy new ones.

Lamenting the situation,Toyota Nigeria Limited (TNL) Managing Director Kunle Ade-Ojo described 2016 as a tough year for the company and the industry.

He said because of foreign exchange constraints, the level of importation of new vehicles dropped by over 60 per cent between January and September, with retail sales dipping by 50 per cent.

With fears that the forex constraints may extend to 2017, the Toyota boss said corporate bodies who were big buyers of vehicles have resorted to cost-cutting measures to remain in business.

“Prices of vehicles had doubled as a result of the forex constraint. As auto companies, we buy forex at black markets to increase turnover and avoid loss. But Toyota in Nigeria, we are built on a solid foundation and years of planning.

“We have also adopted cost-cutting measures and all these are helping us to absorb the economic shocks now,” Ade-Ojo told newsmen last week during the company’s annual press briefing.

Local automobile assembler Stallion Nissan Motors (Stallion NMN) has also reportedly scaled down its operations for some models due to difficulty in importing SKDs. Its spokesman Manny Philipson said auto makers are sharing “in the gloomy situation of the market.”

His words: “Automakers can’t import SKDs and demand has shrunk. Nigerians now have very low disposable income and whenever disposable income is low, demand for vehicles also goes down. People will continue to use the old vehicle they have and do not buy new ones.”

The automakers are now focusing on after-sales services. Ade-Ojo said despite maintaining a four per cent rise in market share in 2016, the company would focus more on after-sale services by January 2017.

He added that this is bearing in mind that most corporate bodies and government agencies, which formed the largest chunk of its clientele, would use their vehicles much longer.

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