What was a hugely-rewarding business venture, the importation and selling of used cars (better known as Tokunbo), now yields minimal returns on investment.
In the past few months, specifically in the final months of 2014, dealers in Tokunbo cars have been on the reverse end of some harsh business conditions, leading them to lament bad business.
First, it was the implementation of a new importation tariff by the Federal Government as part of its New Automotive Industrial Policy Development Plan in July 2014. The new measure saw importers of used cars pay a 70 percent duty (a 100 percent rise from the previous 35 percent).
Now, however, the business is faced with another challenge, which if not curtailed soon could possibly spell doom for the dealers – the skyrocketing value of the dollar.
At the last check (on Wednesday, February 25, 2015) the United States (US) dollar has appreciated to about N230; while the British pounds stands at about N325.
This means that importers pay more than they did last year when the dollar to naira exchange rate was more favourable at less than N180. Prices have, as a result, been driven up as dealers attempt to recoup their investment.
ENCOMIUM Weekly’s findings show that prices have gone up by up to 36 percent this year. This much was revealed when our correspondent spoke to some used cars dealers in Lagos who unanimously fingered the current dollar to naira value as the main reason behind the hike in prices.
They, in addition, pointed out that Tokunbo cars are losing the customer pull it always had as the price difference is now closing up.
Current prices of some Tokunbo cars, compared to last year with the percentage increase in the prices;
– Range Rover Evoque (2012) was sold for about N10,700,000, is now N12,300,000 (representing a 14.01 percent increase)
– Toyota Camry (2008 model) is sold for around N2,200,000. Last year before the rise of dollar value, it sold for between N1,900,000 and N1,950,000 (about 15.78 increase)
– Last year with N1,550,000 you could get a Toyota Camry 2006; however, now, you’d splash N1,700,000 to get one (a 9.68 percent increase)
– Honda Accord 2000 model is sold for N1,100,000 as against N850,000 last year (representing a 29.41 percent increase)
– Honda Civic 2004 now sells at N1,600,000; it was sold for N1,250,000 last year (a 28 percent increase).
– Toyota Camry 2005 currently sells for N1,600,000; whereas it was sold for N1,500,000 before the dollar rose (a 6.67 percent increase)
– 2014 Honda Accord is currently worth N7,500,000. It was, before now, valued at N5,500,000 (36.36 percent increase).
– Toyota Corolla 2006 is valued at N1,650,000; last year it went for N1,400,000 (representing a 17.86 percent increase)
– With N1,400,000, a Toyota Corolla 2003 would be yours; last year, however, it sold for N1,300,000 (a 7.69 percent increase).
– Toyota Corolla 2002 was worth N1,250,000; now it is valued at N1,400,000 (representing a 12 percent increase)
– Toyota Venza 2010 was sold for about N5,000,000; now it goes for between N6,500,000 and N6,800,000 (representing a 32 percent increase)
– Toyota RAV 4 is sold for N3,000,000 as against N2,700,000 last year (representing a 11.11 percent increase).