Two factors, scarcity of foreign exchange and increase in import duty, are largely responsible for the rise in prices of imported new vehicles.

Already, the prices have risen astronomically in the last one year. Investigation by our correspondent shows that the price hike cuts across all segments and it affects virtually all brands.

The Managing Director, TNL, Mr. Kunle Ade-Ojo, confirmed that the foreign exchange fluctuation had exposed the company, other auto companies operating in the country to a huge losses.

He said the losses arose from vehicles sold to dealers this year, whose deals had earlier been concluded but the automobiles were not delivered to the owners due to importation and clearing delays.

Ade-Ojo spoke in Lagos during the company’s customer engagement forum held at the TNL headquarters.

He said, “I know some companies have declared losses this year because of foreign exchange. Toyota (Nigeria) Limited is not spared from what is happening.

“In fact, due to some of the vehicles that we have sold this year, we are exposed to a huge loss as a result of the foreign exchange instability. These are vehicles that we have sold to the dealers and because they sold them off to the customers and customers have paid for them, we have to bear that loss.”

Ade-Ojo, however, said despite the exposure, the company had developed a robust risk management system to continue to serve its customers and dealers in order to remain relevant in the market.

“The losses we’ve made are not going to be passed onto our customers; but future sales are going to be accounted for and that is the reason why we are facing these unsteady increases in prices of vehicles.”

He said, “We’ve been able to cover it. It is not shaking us and we are still trying as much as possible to serve you (customers) better as far as pricing is concerned.”

According to him, a lot of companies have lost billions of naira due to the instability in the forex transactions, despite the flexible policy of the Central Bank of Nigeria meant to liberalise the system.

He said, “When the CBN came out with its policy, it started with a dollar exchanging for N280.5. We had thought that it was going to end at N250. Just last week, the dollar rate rose to over N300 and you can see what the effect of that is on prices.

“We don’t want to price ourselves out of the market but when dollar is changing so frequently, there is nothing we can do but to adjust along that line.”

Ade-Ojo urged dealers to always keep enough stocks and make orders before collecting money from buyers, adding that the current situation was not experienced last year.

He was, however, optimistic that the market would stabilise very soon.

 

Source: Punchng.com

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