In a dust-blown lot, Moeshack Alele approaches a cluster of sport-utility vehicles, not quite ready to spend five years of his savings and borrow from family for a used car. Hundreds of used cars are displayed for sale at the Berger used car market in , Lagos. But along comes dealer Udeagha Oliver saying Nissan Pathfinders have “been selling like crayfish” (the local equivalent for hot cakes).
Mr. Alele, a judicial clerk, agrees to pay $12,000 for a 2003 model from the U.S. and takes off to get the cash. Though shipping, tax and customs have pushed the price well higher than it would be in the U.S., in Lagos this is a deal.
Mr. Alele is typical of Nigeria’s new consumers, eager to find alternatives to perilous minibuses and motorcycle taxis by purchasing their own cars.
The World Bank predicts the number of middle-class Africans, those whose incomes exceed their basic needs, will rise to 43 million by 2030 from 13 million in 2000. That growth extends to Nigeria, the continent’s most populous nation and a budding economic powerhouse.
But in a nation where per capita income is about $2,700 a year, most Nigerians still opt for used cars, making the same sort of transition from subsistence earning to consumer spending that plays out across Africa’s developing economies.
In Nigeria, even preowned cars take on the gloss of status symbol and have developed nicknames. The 2000 Honda Accord is widely known as “Baby Boy.” The flashy 2003 Accord earned the sobriquet “End of Discussion.” Then came the redesigned, equally impressive 2007 Accord: “The Discussion Continues.”
Imports of small, inexpensive new cars from India and China have increased in several African countries in recent years, mainly in South Africa. But in Nigeria these companies are only starting to enter the market. China’s Chery Automobile Co. has five showrooms in Nigeria, and China’s Geely Automobile Holdings Ltd. and India’s Tata Motors Ltd. also have begun selling cars here. Nigerian used-car dealers say they expect new cars from China to be serious competition within five years but that used cars from the U.S. still dominate the market.
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Used-car figures aren’t officially tracked, but the Nigeria unit of the Toyota Motor Corp. estimates that 155,000 used cars of all makes were imported into the country in 2008. That’s about twice what new-car sales were before the financial crisis socked sales in 2009, according to research firm Business Monitor International Ltd.
“In the last several years we have seen a dramatic increase in opportunity from West Africa…and I don’t see that trend reversing,” says Dan Oscarson a vice president for Illinois-based Insurance Auto Auctions, which sells damaged cars at auctions to U.S. and international buyers. He declines to provide sales figures.
But major car makers that sell new cars in Nigeria have stayed away from selling previously owned vehicles. “Eventually, we expect to be involved in the used-car market, but there’s a lot of wheeling and dealing there,” says C.K. Thampy, the managing director of Toyota Nigeria Ltd. “A lot of it is possible only in informal channels.…We can’t play ball with those guys.”