Vehicle repairs, maintenance and car wash services were the best-performing sub-sector in Nigeria’s service economy this July, according to the July 2024 Purchasing Managers’ Index (PMI) statistics from the Central Bank of Nigeria (CBN).
This implies a growing demand for car repairs, maintenance, and washing and increased job opportunities within this industry.
According to the CBN, the PMI gauges the direction of economic activities in Nigeria and is computed based on responses regarding the direction of change in different aspects of respondents’ business activities.
An index above 50.0 points indicates an expansion in business activities while an index below 50.0 points indicates a contraction in business activities.
An index of 50.0 indicates a no-change situation.
People attribute the rise in patronage of mechanics services and spare parts to the high use of fairly used cars which require more frequent repairs, parts replacement, and maintenance.
There is a downside to this: increased spending on frequent repairs hurts people’s pockets, cutting out large chunks of people’s disposable incomes.
The PMI of Mechanic services declined in the last 3 consecutive periods of May, June, and July 2020, when the CBN stopped the release of its PMI. The sector shows increased performance at the relaunch of the PMI this July.
Historically, Nigeria’s service industry PMI has been dominated by sectors such as arts, entertainment and educational services, electricity, gas, steam and air conditioning supply, water supply, sewage and waste management and professional, scientific, and technical services.
The latest PMI data, however, indicates a change, with mechanic and car wash services now taking centre stage.
Mechanics’ Customers: Imported and Locally Used Vehicle Owners
The majority of Nigerians can only afford used imported vehicles, popularly known as Tokunbo, because of the high cost of the new imported ones.However, the soaring exchange rate since July 2023, makes buying imported used vehicles more unaffordable, recording declines in demand for 3 consecutive quarters (Q3 2023 – Q1 2024).