How economy impacts automobile market

Motorists Bemoan Situation

The current rising inflation in the country has forced the cost of transportation to go up, with auto dealers lamenting the effect on sales

According to experts in the transportation sector and motorists, who spoke with The Guardian yesterday, there is an upsurge of above 30 per cent in the price of new vehicles and local transportation.

An automotive resource expert, who is the Principal consultant, Media Advocate Limited, Manny Philipson bemoaned the economic reality, which he said remains the worst ever.

Narrating the impact of the growing inflation, Philipson said; “Until recently, N3, 500 for instance, could fill up my car tank, but with the upward review in pump price, it would cost an average of N8, 000 to fill up the same tank capacity of 55litres. I now have to pay more for virtually every product and services, including transportation either in my car or from one point to another, using public transport.”

He said his purchasing power has been reducing, adding that the rise in prices has also created huge decline in his saving ability.

Philipson disclosed that he now needs more money to procure basic needs, lamenting that his wages hasn’t increased.

He stated that living standard has declined tremendously, and constantly putting Nigerians under pressure.

The automotive sector like every other business is in dare strait when viewed against the current rise in inflation and declining strength of the naira against major world currencies, Philipson said.

According to him, majority of the franchises have run out of stock and may not be able to restock their showrooms and plants at the prevailing exchange rate of the US Dollar, which trades for N375.

Due to the prevailing situation, Philipson added that dealerships are worried that the relative unavailability of forex and the unattractive exchange rate could impair their ability to import products into the country and resultantly incur gratuitous interests on loans from banks and financial institutions.

By implication, he said, “Prospective buyers wouldn’t be able to get vehicles to buy even though they have money and the dealerships too may become reluctant at disposing their old stocks since access to forex for restock isn’t guaranteed”.

A source, who wants his identity concealed, said the economic situation has forced his organisation, which sells premium vehicles to increase prices of the products by more than 30 per cent.

The source said the situation has affected businesses, particularly automotive sector negatively.

“Since we are more import dependent and don’t have control over exchange rate and other things, it is what you ship in that you push to the buyers,” the source said

The story is also the same for a company Secretary, Ademola Felicia, who lamented that though her salary has not increased, but her daily expenses, particularly transportation has risen exponentially.

Previously, Ademola disclosed that her transportation cost from her Ogba resident to Victoria Island in Lagos by Taxi was about N3,000 but it has increased to about N5,000.

A Taxi operator in Lagos, Olusoji Fayintan, also lamented that the economy has affected his operations, noting that people are avoiding Taxi because the cost is now gone up.

However, the development is compelling him to keep to old price or charge less so that he could continue to feed his family.

Managing Director Of an Abuja based Transport Company; Ali Adam said the company had no option than to increase transportation fare.

He lamented that the sector has experienced low patronage, while urging government to find sustainable solution.
A litre of petrol now sells for N145; we don’t have any option than to increase price if we must stay in business, Adam said.