New vehicle fleet purchases drop 90% in 4 years

New vehicle fleet purchases drop 90% in 4 years

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Corporate organisations financial ability in the purchase of brand new vehicles as pool cars and other logistics needs in Nigeria have dropped abysmally to 90 percent in past four years as result of the 70 percent on imported brand new vehicles, BusinessDay findings revealed.

Instead of the preference for brand new vehicles before the imposition of the 70 percent tax, many of them including the banks, insurance firms, oil companies, have in the past four years chosen to be refleeting their vehicle pool especially with used, including accidented vehicles from the different countries of origin that are imported into the country and subsequently fixed and refurbished.

Over time, many of the accidented that were later refurbished with its attendanted long or short susceptibility to crashes as a result of some of the defects that accompanied it upon entry are eventually sold as pool cars to the corporate institutions at cheaper prices.

This ugly situation has become worrisome when many Nigerians yearn to own a car of their own, but paying fully for one is a luxury aand most of them can’t even afford it in this economy when leading an active life requires mobility.

Reacting on the reasons for his company’s preference for used instead of brand new vehicles, Kelly Emeka, a finance manager of one the corporate institutions in Lagos told BusinessDay that, the move to settle for tokunbo cars was as a result of affordability due to the astronomical increase in the prices of new cars that has hit the roof top.

According to Emeka, ‘’As the period begin to witness shrinking economic activities and companies begin to witness reduced revenues and rising overhead cost, thereby making funds unavailable for new cars purchase, it becomes increasing imperative to make adjustments in the day-to-day funding of the operations of the company’’.

He said that, the strategy wasa way of cutting cost of interest rates charged by the banks, adding that, this trend started after immediately after the elections in 2015 when the exchange rates of the naira sky rocketed.

The current trend where banks especially can neither buy new vehicles for their official or even finance new vehicle purchases for the buying has become so damning that even a subsidiary company cannot even afford to purchase brand new vehicles from one of its subsidiary company that operates a new car dealership.

It would be recalled that, upon introduction national automotive policy of 2013 introduced by the immediate past administration of former President Goodluck Jonathan, the automotive policy increased the tariff on imported vehicles by imposing 35 percent duty and 35 percent levy, amounting to 70 percent tariff to be paid on imported cars to the Nigeri Customs Service (NCS).

BusinessDay checks reveal that over 60 percent of vehicles imported through the nation’s seaports are accidented vehicles. For any vehicle to qualify considered as an accidented vehicle and quality for 30 percent rebate, some very important components of the vehicles such as the chassis, airbags and a large chunkof the body, must be certified damaged.

Figures from the National Bureau of Statistics (NBS) shows that 105,189 units of vehicles were imported by Nigerians in 2016through the ports, while in 2017, the volume of imported vehicles grew by 2.46 percent to hit 181,404 units.

As a result of this, the quality of vehicles imported into the country has deteriorated over the last four years. Industry followers have attributed this to the recession and the shrinking purchasing power of mnay people. This is majorly because, not everybody can afford a very expensive vehicle that and this accounts for the main reason why people are importing older or accidented vehicles.



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