Until recently, the used vehicle
business in Nigeria used to be a debasing one; the market was mainly for
the organised dealers who were considered not financially strong enough
to venture into new vehicle business.
But things are fast changing as notable
car dealers, including Cosharis Motors and Elizade Nigeria Limited, have
become major investors in the business of Tokunbo cars as used cars are
popularly called.
The latest entrant is Kia Nigeria
Limited, which has just announced the launch of what it calls ‘best ever
certified used car programme’.
A statement by the Marketing Manager,
Dana Motors Limited, Mr. Jimoh Olawale, obtained via email, said the
programme would offer many people “the platform to get the best
valuation for their cars in real time at our used car showroom in
Lagos.”
Dana Motors, which is the representative
of Kia Motors in Nigeria, also stated in the announcement that the used
car programme would provide the opportunity for people to sell their
old Kia cars or swap them for new models.
It said, “The programme enables you to
sell your car or swap it for a new model either by outright purchase or
finance scheme. We are partnering one of the leading banks to provide a
highly competitive EMI and repayment tenure to best fit your budget.”
The interest of new car dealers in the
Tokunbo market, it was leant, was due to the high volume of the business
in relation to the new vehicle market.
For instance, while dealers of new
vehicles are struggling to sell about 20,000 units in a year, the
Tokunbo market controls over 200,000 units annually, according to the
Director-General, National Automotive Design and Development Council,
Aminu Jalal.
He also lamented that the harsh
operating environment affecting every sector of the Nigerian economy was
taking a heavy toll on the automobile sector, with the annual sale
volume of 450,000 cars dropping to about 250,000 owing to the drop in
the people’s purchasing power.
But the used car business has always
been a booming industry in other parts of the world, especially in
developed countries such as the United States, the United Kingdom,
France and Germany.
A report contributed recently by
Gurufocus to an American business magazine, Forbes, under the title,
‘The used car market: What is driving the growth, noted that in the last
few years, the used car market had demonstrated a significant growth in
value contributing largely to the overall market value.
For instance, the writer noted that in
the UK, the used car market contributed 51 per cent of the total sales
in 2014 with GBP 45.1 billion.
Quoting Wikipedia, the free online
resource, another report on the issue by the Nigeria Auto Journal
stated, “With annual sales of nearly $370bn, the used vehicle industry
represents almost half of the US auto retail market and is the largest
retail segment of the economy.”
Prior to the coming of Elizade and
Cosharis into the Tokunbo car market, the report listed the first set of
major dealers in the business as LanreShittu Motors and Mandilas
Motors.
“While Lanre Shittu Motors has over the
years been known for its franchise holding of Mack trucks and Yutong,
Mandilas Motors on the other hand is currently an accredited dealer of
Toyota Nigeria Limited, representative of Toyota brand in Nigeria.”
It quoted Elizade as saying its
Certified Used Toyota Vehicle Division “is set up to meet quite a
reasonable number of customers’ expectation with regard to a wide
variety of American used Toyota cars with the intention to assist and
satisfy the Nigerian market,” adding that the division was being run
separate from the main Elizade Motors business of new Toyota and JAC
brands.
An automobile expert and analyst, Dr.
Oscar Odiboh, also shared the view that the decision by new car dealers
to expand their business with the used car sale was “a reaction to the
recession… most people can no longer afford brand new cars. So, Tokunbo
(used cars) has become a booming business, as all new cars dealers are
facing a serious decline in their sales figures.”
Source: Punch Nigeria
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