Owing a car in Nigeria is still a big thing. For most folks, affording a car is a sign that poverty has been conquered. The arrival of a car in a family is often celebrated with the glee and fanfare that characterise the birth of a male child in the traditional African family. Nigerians are party-loving people and when a car arrives, parties follow, neighbours are called and even the “enemies” are taunted prayerfully as having lost the battle.
The cars being referred to in this context are not even brand new cars but imported fairly used cars or what is generally referred to as “tokunbo” in street lingo. When a man buys a brand new car, he is said to have “arrived.” This is so because since the Nigerian economy began its journey from bad to worse in the middle 80s, most people gave up the hopes of ever affording brand new cars.
But things changed relatively during the financial services boom of between 2005 and 2008. Competition among bankers for customers gave rise to asset finance products, one of which derivative was the financing of the purchase of brand new cars by banks on behalf of their customers.
During this season, a lot of people went into the market and acquired for themselves brand new cars of taste and quality. Even the Korean and Chinese automobile companies that were not very popular among Nigerian car freaks took advantage of the window to endear themselves into hearts and minds. They brought in cheap cars and through a number of arrangements with banks and other channels, sold thousands of units.
The point to note is that while the global economic meltdown was forcing car sales to decline globally, the Nigerian auto sales was bursting the charts in terms of sales, selling large units at attractive sales margins. Industry watchers attributed this to the boom asset finance market then, the huge market that the country represents and relatively affordable options as most cars used in Nigeria are out dated by at least 3 years. But that is only for one side of the automobile business; car distributorship.
Car Assembly isn’t doing too well. While on one hand the Automobile industry in Nigeria is moribund because it currently has only one serious car assembling company which is Peugeot Automobile Nigeria Ltd (PAN), on the other hand is doing extremely well with Major car dealers found in the most exotic parts of the country.
But that is another story. The challenge those who purchased brand new cars are facing at the moment are legion. A lot of people can no longer afford the prohibitive cost of maintaining their cars as at the end of the day, it is being discovered that car shops are charging extremely unaffordable rates for the repair and service of cars purchased from their fold.
Take the case of Kia for instance. To walk away with a brand new Kia brand cost as low as N900,000 for the low-end Picanto brand as at 2008. Kia Rio will squeeze just about N1.2million from a would-be buyer’s pocket and he is a proud owner.
Buy the joy ends there and sorrow will follow after just about six months. Getting Dana Motors, the owners of the Kia franchise in Nigeria to service the car can take as much as N50,000. And this is just for routine maintenance. At any time there is a major repair, fees can be as high as N200,000. For a car purchased at just about N1million, this is something to cause a heartache.
The story is the same for all the other brands. Those who rushed the Suzuki brands when C&I Motors launched them in the country had fun and respect when they acquired the cars. But what has followed are tales of disappointment as C&I charged outrageously for repairs and service. The same goes for Hyundai, Ford and Nissan, especially those brands that enjoy exclusive franchises.

The Huge Return on Investment
Findings indicate that car dealers in Nigeria are known to make up to 300% return on their investment. This is just on sales alone. When the issue of service comes up, most folks would rather not even discuss it. The only lucky ones are those who bought the popular Japanese cars like Nissan, Honda, Toyota and Mitsubishi. This is not to say that if they go into the garages of the franchisees they will not pay through the nose. That is not so. But these brands are so popular that spares and relatively competent mechanics are available on the street. Meaning they could call the bluff of the franchisee and get exactly the same service on the street at less than 10 percent the cost.
Take the story of Abubarkar Suleiman, a banker who lives in Lagos. He acquired a “luxury” car back in 2008 and after just over one year, he discovered he was paying more for maintenance than he should. He parked the car for some months in a bid to devise a means of navigating the prohibitive cost.
“These guys here (the car dealers in Nigeria) are just ripping us off,” Suleiman said. “Nigeria is the most expensive car market in the world both in terms of purchasing and maintenance. I have suffered in their hands for so long and I really do not blame them because they are here to make money. But sometimes I just can’t but wonder why the cost of running a car here is almost five what it costs in other countries.”
For Ifeanyi Udeh, the story is not different. “I have travelled far and wide and I have not seen a country where maintaining a car is as high as it s in Nigeria. It is true these guys are in business to make money, but them at what cost? Are they not worried about repeat purchases?
Ifeanyi thinks the reason car franchises charge so much is because of the limited options. For him, car dealers in Nigeria are so few that those in the fray can afford to charge huge premiums. He is also certain that “If the country had succeeded in developing indigenous cars, the imported ones would have no reason to cost so heavily.
But Leke Adeneye, an entrepreneur sees the problem in the craze by Nigerians for status. “It got to a point where owning a brand new car was a status symbol. You hear people announcing how they just acquired a “tear rubber to friends and family.” These car companies therefore are capitalising on this to make hay because the people would want to retain their status by paying the prohibitive charges of these car shop owners. If people are not paying for it, there is no way they would charge such huge fees.”
But while most folks are still at a loss as to how to circumvent the huge charges of the car shop owners in Nigeria, Suleiman has already devised his means.
According to him, the manual that comes with the cars most times contain information on the lifespan of most spare parts of the vehicle. “So what I do is that I conduct a regular check and each time I spot one due for replacement, I put a call through to my brother in the United States who will then buy and ship to me here. I will just take delivery and then the mechanic will just fix.”
This, according to him, is important because most spare parts sold in the Nigerian open market are fake and will do more harm to the car than good.
Suleiman also has a strange advice to Nigerians. “Buying these so-called brand new cars is just to provide temporary satisfaction for the ego. We suffer the consequences later. You may not like what I am saying buy after my first experience, I have said good bye to purchasing brand new cars in Nigeria until further notice. It is better, safer and even more cost effective to by a fairly used car that you can maintain and service than acquire a brand new car that will become a burden in six months.
The good thing is that we do not have to go far to get good deals. There are so many internet sites like eBay where one can get good quality cars from abroad. Once you pay, they ship it for you and you can then go to sleep.