VEHICLE IMPORTS SLIDE AS CREDIT REMAINS TIGHT
Nigerian automobile imports fell by more than a quarter in the first 10 months of 2010, compared to the same period last year as cash-strapped consumers shied away from big-ticket purchases, industry officials said.
Vehicle sales in Africa's most populous nation are a proxy measure for private purchasing power, a leading economic indicator, which is not formally available in Nigeria, according to a Reuters report on Thursday.
Nigerian port figures showed that new vehicle imports in the first 10 months tumbled by 26 per cent to 29,372 units, Reuters said, quoting the General Manager, Dana Motors, Mr. Nohan Sethi, whose company imports Kia cars and vans.
Banks in sub-Saharan Africa's second-biggest economy tightened lending in the wake of last year's $4bn bail-out of nine lenders and credit flows are yet to recover.
Credit to the private sector grew by just 1.3 per cent by the end of September from the start of the year, compared to 22 per cent growth in the same period of 2009 and 48 per cent growth in the same period of 2008, according to the Central Bank of Nigeria's figures.
The central bank has made restoring lending one of its top priorities. It raised the benchmark interest rate by 0.25 per cent to 6.25 per cent in September but had kept it on hold at six per cent for more than a year despite double-digit inflation.
It has also established the state-run Asset Management Corporation of Nigeria to absorb bad loans from banks in a bid to clean up their balance sheets and enable them to start lending again.
Sethi said most consumers in Nigeria used bank financing to purchase vehicles and estimated that the pent-up demand meant sales could increase by 20 per cent next year if credit recovered.
'The improvements we expect will come if banks start lending again,' Sethi told Reuters.
'I don't think there are more than five or 10 per cent of Nigerians who can pay cash for vehicle purchases,' he said.
Dealers expect new car imports to Nigeria to reach just 35,000 units this year, shy of the 44,757 achieved last year.
Industry sources put the market size for used vehicles sold in Nigeria at 200,000 per annum and say the market has remained broadly stable because of its competitive pricing.