- Title: NIGERIA: Car sales slump by almost 40 percent
- Date: 14th December 2009
- Summary: PAPER ON TABLE
- Embargoed: 29th December 2009 12:00
- Location: Nigeria
- Country: Nigeria
- Topics: Industry
- Reuters ID: LVA55DLJGF90YDFFS9AIOC8Q3MOY
- Story Text: New vehicle imports into Nigeria slumped by 38 percent during the first eleven months of 2009 as consumer credit dried up and dealers cut back on orders, importers have said.
Wilson Anumudu, one of the dealers in Nigeria for Toyota Motor Corp which controls 40 percent of the market in sub-Saharan Africa's second biggest economy, said the frequency of customer enquiries and purchases is on a downward trend.
"Within the last period of the year, where we call our seasonal boom purchases has gone done low; lower than anything I know ever since I joined the auto industry. Customers are very scarce to come by which means our sales have to come down because customers make our sales" Anumudu said.
Anumudu blamed the car sales slump on the ongoing Nigeria banking crisis and the dollar-yen exchange rate, which he says does not favour car dealers.
"This could be attributed to the banking audit and the exchange rate the dollar - Yen exchange rates is giving Toyota more trouble than we can contend with," Anumudu said.
Car dealers in the country have been predicting a slump in car imports this year as Nigerian banks, hit by loan losses, pulled the plug on asset financing. They said efforts to attract consumers with price discounts were yet to pay off.
Nigerian banks extended credit aggressively to a growing middle class for much of last year, offering salary-backed loans for everything from refrigerators to cars and share purchases following consolidation which saw their capital bases swell.
But as the global downturn took its toll, bank loans, particularly to stock market speculators and fuel importers, turned bad, causing credit to the wider economy to dry up, including loans to buy vehicles.
Industry sources put total new car sales last year at about 75,000 units. Credit sales accounted for around 22 percent of that total but have since dropped to virtually nil.
Since August 14, the central bank has injected a total of 4 billion U.S. dollars to bail out nine weakly capitalised banks which are judged to be facing a severe liquidity crisis. It has made getting credit flowing again a top priority.
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