- 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.”
COVID-19 Plunges Nigeria’s Oil Revenue by 41% in the First Nine Months of 2020
Nigeria’s oil revenue declined by 41.44 percent in the first nine months of 2020 to $2.033 billion, according to the latest data from the Nigerian National Petroleum Corporation, NNPC.
This represents a decline of 41.44 percent from $3.47 billion filed in the same period of 2019 when there was no COVID-19.
In the September 2020 edition of NNPC’s Monthly Financial and Operations Report (MFOR), revenue from oil and gas rose by 16 percent to $120.49 million in the month of September, a 66 percent or $234.81 million drop from $355.3 million posted in the same month of 2019.
The global lockdowns caused by the COVID-19 pandemic plunged Nigeria’s crude oil sales and global demand for the commodity. This was further compounded by Nigeria’s high cost of production compared to Saudi Arabia, Russia and others that were offering discounts to boost sales during one of the most challenging periods in human history.
Experts like Prof. Yinka Omorogbe, President of Nigeria Association of Energy Economics, NAEE, were not surprised with the drop in earnings given the effect of COVID-19 on the world’s economy.
She, however, called for the revamp of the nation’s petroleum sector laws and diversification of the economy away from oil revenue dependence. She said “Covid-19 made 2020 a very hot year and it battered the oil industry internationally and we are not an exception; so we could not have been unaffected”.
She also said the effect of the fall “is definitely a wake-up call; we have to diversify, strengthen our other resources and capabilities”.
Omorogbe, a former NNPC Board Secretary, urged the government and the operators in the sector to look inward and think strategically, stating: “think medium term, think of where they want to be and the government, above all, must think of how best we can utilize our resources, so that we can achieve our objectives once we know and define them.
“It is a clear wake-up call, if not we will just sit here and find that we have become one of the poorest nations in the world”, she noted.
Crude Oil, Other Commodities Closing Price for Monday
Brent crude oil, Nigeria’s crude oil benchmark, gained 47 cents to $55.88 per barrel on Monday, while the US crude oil expanded by 50 cents to $52.77 per barrel.
Gold for February delivery fell $1 to $1,855.20 an ounce. Silver for March delivery fell 7 cents to $25.48 an ounce and March copper was little changed at $3.63 a pound.
The dollar fell to 103.80 Japanese yen from 103.83 yen. The euro fell to $1.2139 from $1.2167.
Wholesale gasoline for February delivery rose 1 cent to $1.56 a gallon. February heating oil rose 2 cents to $1.59 a gallon. February natural gas rose 16 cents to $2.60 per 1,000 cubic feet.
Gold Gained Ahead of Joe Biden Inauguration 2021
Gold price rose from one and a half month low on Tuesday ahead of President-elect Joe Biden’s inauguration on Wednesday.
The precious metal, largely regarded as a haven asset by investors, edged up by 0.2 percent to $1,844.52 per ounce on Tuesday, up from $1,802.61 on Monday.
He said, “The key factor appears to be the (U.S.) currency.”
As expected, a change in administration comes with the change in economic policies, especially taking into consideration the peculiarities of the present situation. In fact, even though Biden, Janet Yellen and the rest of the new cabinet are expected to go all out on additional stimulus with the support of Democrats controlled Houses, economic uncertainties with rising COVID-19 cases and slow vaccine distribution remained a huge concern.
Also, the effectiveness of the vaccines can not be ascertained until wider rollout.
Still, which policy would be halted or sustained by the incoming administration remained a concern that has forced many investors to once again flee other assets for Gold ahead of tomorrow’s inauguration.
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