• Resort to sale of refurbished cars
• Nigerians importing fewer used vehicles as imports slump by 83% in H1
Due to scarcity of foreign exchange (FX), hikes in tariffs, increases in import duty and other related issues, automobile dealers have lamented their inability to import fairly used cars into the country.
This is even as they have now resorted to the recycling of Nigerian used cars while others have abandoned the automobile business entirely. Speaking with The Guardian, the President, Association of Motor Dealers of Nigeria (AMDON), Prince Ajibola Adedoyin, said the hike in taxes, fuel and tariffs have affected the importation of cars into Nigeria.
Meanwhile, Nigeria’s import bills on used vehicles, popularly known as ‘tokunbo’, fell by 83 per cent year-on-year to N138.62 billion in the first half of the year, from N819.15 billion in H1’23.
Quarter-on-quarter, a breakdown of the National Bureau of Statistics (NBS) for the review period showed that in Q1 ’24 no used vehicle was imported compared to N69.23 billion worth of used vehicles that were imported in Q1’23.
In Q2’24, the value of imported used vehicles stood at N138.62 billion, representing an 81.5 per cent decline YoY from N749.92 billion in Q2’23. NBS noted that the used vehicles were imported mainly from the United States of America, stating: “On the other hand, total imports from America in Q2’24 stood at N971.84 billion.
Recall that last year, the Federal Government introduced a new set of taxes on imported vehicles, among other things. The new tax regime stipulates that imported vehicles between 2000 capacity (two litres) and 3999 capacity (3.9 litres) engine will pay an additional charge known as Import Adjustment Tax (IAT) levy of two per cent of the value of the vehicle, while vehicles with 4000 capacity (four litres) and above engines will attract IAT of four per cent of their value.
The new levy is in addition to the 35 per cent import duty and 35 per cent levy being paid by importers of vehicles. However, vehicles below 2000cc, mass transit buses, electric vehicles, and locally manufactured vehicles are exempted from the IAT levy.
The government also revised the import prohibition list with the inclusion of used motor vehicles above 12 years from the year of manufacture. According to Adedoyin, the situation has driven a lot of importers out of the business.
“The implication of this is that there would be safety-related issues because most of what is happening now is recycling of Nigerian used cars.
“Importers can no longer bring in cars due to the high foreign exchange rate. Apart from the exchange rate, there is an increase in import duty, which we have made clear to the government, is affecting us negatively and have asked that something be done about it. The hike has had adverse effects on our members because it has chased some of them away from the business.
“Even when you buy a car and sell it at a profit, you cannot buy another one with the current price we use to import and that is why some people have abandoned the business. The government needs to take urgent steps to address the situation,” he said.
He said if the government fails to do something about it, apart from the transportation that will be badly affected, the safety of Nigerians and the economy will be affected.
“The economy is all about the movement of goods, services and people from one place to another. That is what forms the economy. So, anything that affects transportation affects the economy of the country,” he said.
He warned that the consequences of recycling old Nigerian used vehicles are the possibility of an increase in the rate of accidents because they will suffer from wear and tear, causing them to break down.
