Stakeholders advocate vehicle financing education in Nigeria

Stakeholders within the automotive industry have stressed the need for more education and transparency on how car financing works in Nigeria.

According to them, there should be more enlightenment, so that the space becomes more accommodating.

Indeed, buying cars in Nigeria, whether new or used ones, comes at a high cost. Today, only a few Nigerians can purchase a car effortlessly without having to take a loan.

Besides, the volume of business in the car financing business dominated by banks is falling as a result of high interest rates.

This is where auto financing companies as well as banks come in to help many Nigerians, particularly the working class, who need a loan to finance the purchase of their dream vehicles.

Firms like Autocheck and Innoson Vehicle Manufacturing Co. Ltd. have successfully initiated car-financing schemes.

Similarly, Union Bank of Nigeria partnered with Choice International Group Motors Limited to provide auto-financing services to customers purchasing GAC range cars through an asset finance loan scheme.

Recent data from the Central Bank of Nigeria’s Money Market Indicators indicates a maximum lending rate of 27.59 per cent for August 2023, signifying the rate charged by commercial banks for lending to customers with a low credit rating.

This is even as the 40 per cent increase in duty payment on fairly used vehicles has eroded the country, purchasing vehicles has become a nightmare for average Nigerians.

Chief Operating Officer, Autochek MarketPlace, Mayokun Fadeyibi, said education is needed to drive the penetration of auto financing across the continent. People need to know how credit works and be equipped to make the best decisions on how they can effectively use it.

Fadeyibi while speaking with The Guardian said transportation is an important pillar that underpins various socioeconomic activities.

Speaking on efforts to ensure government fulfills its part on vehicle finance scheme, she said as a private company, there isn’t much that can be done to influence the government, stating that the company is constantly working with as many stakeholders as it can to ensure that vehicle ownership is more accessible and affordable

Fadeyibi said achieving government support for an automotive finance scheme may take time and persistence; however, building strong relationships with key stakeholders and demonstrating the scheme’s benefits to the broader economy can encourage further participation.

Besides, she said the increase in import duties would further increase the cost of purchasing vehicles, as well as affect the purchasing decisions of both private individuals and companies.

“While the 40 per cent increase in duty is “not great news”, people still need vehicles and we envisage that they will continue to buy vehicles, even if they buy smaller ones. What has become apparent over the years is that the overall demand for vehicles rarely changes significantly.”

She stated that the brand and specifications of the vehicles might change as a result of affordability and consumers might opt for cheaper alternatives or delay purchasing decisions but people typically purchase vehicles if they feel they need it.

Also speaking with The Guardian, Marketing Manager, Dana Motors Limited, Jimoh Olawale, said the automotive industry is undergoing a profound and challenging phase due to high pricing, low consumer buying power, and the dearth of financing options.

Olawale said as an indispensable player in the industry, auto finance companies would also need to transform their business models to align with the new reality that confronts the economy.

He said the economic recovery is likely to come slower than many imagine hence, the stakeholders in today’s industry have an important role to play to transform and adapt, creating a sustainable and enduring financing option to the teeming consumers.

Olawale said there is no gainsaying the fact that diversification of the economy has become the new song on the lips of many stakeholders and political economists, however, a sickening financial institution will forever make the dream of our industrialised economy a nightmarish one, as the role of a formidable car financing cannot be over-emphasized.

He said the automotive industry is currently gasping for breath as a result of the unabated importation of used cars and ever decreasing buying power of the consumers, to provide a great leap in the survival of this sector, affordable car financing and favorable monetary policies are apparently the only go-to options for all stakeholders.