- Kia Joins Elizade, Cosharis in Used Car Business
Until recently, the used vehicle business in Nigeria used to be a debasing one; the market was mainly for the organised dealers who were considered not financially strong enough to venture into new vehicle business.
But things are fast changing as notable car dealers, including Cosharis Motors and Elizade Nigeria Limited, have become major investors in the business of Tokunbo cars as used cars are popularly called.
The latest entrant is Kia Nigeria Limited, which has just announced the launch of what it calls ‘best ever certified used car programme’.
A statement by the Marketing Manager, Dana Motors Limited, Mr. Jimoh Olawale, obtained via email, said the programme would offer many people “the platform to get the best valuation for their cars in real time at our used car showroom in Lagos.”
Dana Motors, which is the representative of Kia Motors in Nigeria, also stated in the announcement that the used car programme would provide the opportunity for people to sell their old Kia cars or swap them for new models.
It said, “The programme enables you to sell your car or swap it for a new model either by outright purchase or finance scheme. We are partnering one of the leading banks to provide a highly competitive EMI and repayment tenure to best fit your budget.”
The interest of new car dealers in the Tokunbo market, it was leant, was due to the high volume of the business in relation to the new vehicle market.
For instance, while dealers of new vehicles are struggling to sell about 20,000 units in a year, the Tokunbo market controls over 200,000 units annually, according to the Director-General, National Automotive Design and Development Council, Aminu Jalal.
He also lamented that the harsh operating environment affecting every sector of the Nigerian economy was taking a heavy toll on the automobile sector, with the annual sale volume of 450,000 cars dropping to about 250,000 owing to the drop in the people’s purchasing power.
But the used car business has always been a booming industry in other parts of the world, especially in developed countries such as the United States, the United Kingdom, France and Germany.
A report contributed recently by Gurufocus to an American business magazine, Forbes, under the title, ‘The used car market: What is driving the growth, noted that in the last few years, the used car market had demonstrated a significant growth in value contributing largely to the overall market value.
For instance, the writer noted that in the UK, the used car market contributed 51 per cent of the total sales in 2014 with GBP 45.1 billion.
Quoting Wikipedia, the free online resource, another report on the issue by the Nigeria Auto Journal stated, “With annual sales of nearly $370bn, the used vehicle industry represents almost half of the US auto retail market and is the largest retail segment of the economy.”
Prior to the coming of Elizade and Cosharis into the Tokunbo car market, the report listed the first set of major dealers in the business as LanreShittu Motors and Mandilas Motors.
“While Lanre Shittu Motors has over the years been known for its franchise holding of Mack trucks and Yutong, Mandilas Motors on the other hand is currently an accredited dealer of Toyota Nigeria Limited, representative of Toyota brand in Nigeria.”
It quoted Elizade as saying its Certified Used Toyota Vehicle Division “is set up to meet quite a reasonable number of customers’ expectation with regard to a wide variety of American used Toyota cars with the intention to assist and satisfy the Nigerian market,” adding that the division was being run separate from the main Elizade Motors business of new Toyota and JAC brands.
An automobile expert and analyst, Dr. Oscar Odiboh, also shared the view that the decision by new car dealers to expand their business with the used car sale was “a reaction to the recession… most people can no longer afford brand new cars. So, Tokunbo (used cars) has become a booming business, as all new cars dealers are facing a serious decline in their sales figures.”
Increased Demand Paves The Way for Expansion of Africa’s Sugar Industry
Africa, June 2021: A new focus report produced by the Oxford Business Group (OBG), in partnership with the International Sugar Organization (ISO), explores the potential that Africa’s sugar industry holds for growth on the back of an anticipated rise in regional demand. The report was presented to ISO members during the MECAS meeting at the Organization’s 58th Council Session, on June 17th 2021.
Titled “Sugar in Africa”, the report highlights the opportunities for investors to contribute to the industry’s development by helping to bridge infrastructure gaps in segments such as farming and refining and port facilities.
The report considers the benefits that the African Continental Free Trade Area (AfCFTA) could deliver by supporting fair intra-African sugar trade efforts and bringing regulatory frameworks under a common umbrella, which will be key to improving competitiveness.
The increased international focus on ESG standards is another topical issue examined. Here, the report charts the initiatives already under way in Africa supported by green-focused investment with sustainability at their core, which will help to instil confidence in new investors keen to adhere to ESG principles in their decision-making.
In addition, subscribers will find coverage of the impact that Covid-19 had on the industry, with detailed analysis provided of the decrease in both worldwide sugar production and prices, as movement restrictions and social-distancing measures took their toll on operations.
The report shines a spotlight on sugar production in key markets across the continent, noting regional differences in terms of output and assessing individual countries’ roles as net exporters and importers.
It also includes an interview with José Orive, Executive Director, International Sugar Organisation, in which he maps out the particularities of the African sugar industry, while sharing his thoughts on what needs to be done to promote continental trade and sustainable development.
“The region is well advanced in terms of sugar production overall, but several challenges still hinder its full potential,” he said. “It is not enough to just produce sugar; producers must be able to move it to buyers efficiently. When all negotiations related to the AfCFTA have concluded, we expect greater investment across the continent and a clearer regulatory framework.”
Karine Loehman, OBG’s Managing Director for Africa, said that while the challenges faced by Africa’s sugar producers shouldn’t be underestimated, the new report produced with the ISO pointed to an industry primed for growth on the back of anticipated increased consumption across the continent and higher levels of output in sub-Saharan Africa.
“Regional demand for sugar is expected to rise in the coming years, driven up by Africa’s population growth and drawing a line under declines triggered by the Covid-19 pandemic,” she said. “With sub-Saharan Africa’s per capita sugar consumption currently standing at around half of the global average, the opportunities to help meet increasing domestic need by boosting production are considerable.”
The study on Africa’s sugar industry forms part of a series of tailored reports that OBG is currently producing with its partners, alongside other highly relevant, go-to research tools, including a range of country-specific Growth and Recovery Outlook articles and interviews.
Global Demand for Investment Gold Plunged by 70% YoY to 161 Metric Tons in Q1 2021
Last year, investors flocked to gold as stock markets crashed on a gloomy economic outlook due to the spread of the COVID-19 pandemic. In the second quarter of 2020, global demand for investment gold surged to over 591 metric tons, the second-highest level since 2016. However, the investors’ demand for gold has dropped significantly this year.
According to data compiled by AksjeBloggen, global demand for investment gold plunged by 70% year-over-year to 161 metric tons in the first quarter of 2021.
The Lowest Quarterly Figures after Record Gold Investments in 2020
In 2016, the global gold demand amounted to 4,309 metric tons, revealed Statista and the World Gold Council data. By the end of 2019, this figure rose to 4,356 metric tons. Investment gold accounted for 30% of that amount. Worldwide gold jewelry demand volumes reached 2,118 metric tons that year. Central banks and technology followed with 648 and 326 metric tons, respectively.
Statistics show the global demand for investment gold surged amid the COVID-19 outbreak, growing by 35% YoY to almost 1,800 metric tons in 2020. Demands for gold used in technology also rose by 17% to 383.4 metric tons, while central banks and other institutions bought 326.2 metric tons of gold in 2020, a 50% plunge in a year.
However, after record gold investments in 2020, the global demand for gold for investment purposes dropped to the lowest quarterly level in years.
The Price of Gold Dropped by 5% Since January
The average gold value tends to increase during a recession, making it an attractive investment in uncertain times. In February 2019, a troy ounce of gold cost $1,320.07, revealed the Statista and World Gold Council data. By the end of that year, the price of gold rose to $1,479.13.
The gold price continued growing throughout 2020, reaching an all-time high of over $2,000 in August. By the end of the year, the precious metal price slipped to $1,864 and then rose to over $1,950 in January 2021.
However, the first quarter of the year brought a negative trend, with the price of gold falling to $1,684 by the end of March. Statistics indicate the price of gold stood at around $1,860 last week, a 5% drop since the beginning of the year.
Gold, Other Safe Haven Assets Plunge Ahead of Fed Rate Hikes
Gold and other safe-haven assets plunged last week as the Federal Reserve signals the possibility of raising interest rates twice in 2023 given the ongoing economic recovery post-COVID-19.
The price of gold dropped by 6.04 percent last week as investors rushed to move their funds out of safe-haven assets including the new gold, cryptocurrency.
The entire crypto space sheds $898 billion in market value to hover around $1.625 trillion last week, down from $2.523 trillion recorded on Wednesday 12, 2021. Its highest market capitalisation till date.
The Federal Reserve raised inflation expectations to 3.4 percent and shifted the year it is expected to increase interest rates from near-zero to 2023 from the previously projected 2024.
The new hawkish stance of the central bank led to capital outflow from safe havens and subsequently boosted dollar attraction.
The United States Dollar gained across the board with the dollar index that tracks its performance against six major currencies, rising by 0.63 percent to 91.103 last week.
However, on Monday morning the gold showed signs of recovery, gaining 0.5 percent to $1,772.34 per ounce following the retreat in U.S. treasury yield that boosted the attraction of non-yielding metal.
Bitcoin, the most dominant cryptocurrency coin, pared losses to $33,245 per coin, up from the $32,658 decline it posted last week.
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