FG Slashes Import Levy on Tokunbo, New Cars as Dealers Reveal Why Prices May Not Crash Yet
- Nigeria has slashed import levies on vehicles, boosting automotive industry optimism but raising price concerns
- Industry warns against immediate vehicle price drops, citing exchange rate instability and logistics costs
- Stakeholders urge government to tackle structural issues for lasting benefits of new import policy
Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
The Federal Government's decision to slash import levies on new and used vehicles has sparked optimism across Nigeria's automotive industry, with dealers, customs agents and freight forwarders describing the move as a step in the right direction.
However, industry stakeholders have warned that Nigerians should not expect an immediate drop in vehicle prices, citing exchange rate instability, high port charges and persistent logistics bottlenecks as major cost drivers.
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The revised levy regime, which took effect on July 1 alongside the implementation of the Green Tax Surcharge, is part of the federal government's 2026 Fiscal Policy Measures aimed at reducing vehicle import costs, boosting trade and supporting economic growth.
Lower levies to reduce clearing costs
Under the new policy, the import levy on brand-new vehicles has been reduced from 20% to 10%, while the levy on used vehicles, popularly known as Tokunbo cars, has been slashed from 15% to 5%.
Industry operators estimate that the changes could cut vehicle clearing costs by as much as 45%, saving importers more than N700,000 on an average passenger car.
For example, clearing a Toyota Camry that previously cost about N4 million is now expected to cost between N3.2 million and N3.3 million under the revised tariff structure.
Dealers caution against high expectations
Despite welcoming the policy, stakeholders said the levy reduction alone would not translate into significantly cheaper vehicles unless the government also addresses exchange rate volatility, multiple port charges, terminal handling fees and delays in cargo clearance.
With the naira continuing to fluctuate between N1,400 and N1,500 to the dollar, importers argued that foreign exchange remains the biggest factor determining the final landing cost of imported vehicles.
Lagos-based car dealer Sunny Madubuko recalled that a similar reduction introduced during former President Muhammadu Buhari's administration failed to make cars more affordable because currency depreciation and other import costs wiped out the expected gains.
According to him, while the policy appears positive on paper, consumers may not enjoy substantial price relief because other major import expenses remain unchanged.
Green Tax reduces overall savings
Managing Director of Mikky Excellency Nigeria Limited and customs broker, Alhaji Abdulazeez Babatunde Mukaila, disclosed that the government also reviewed tariffs on hundreds of imported products.
According to him, duties were reduced on about 127 items, while rates increased on roughly 192 others.
Mukaila noted that although the levy on Tokunbo vehicles dropped by 10 percentage points, the newly introduced Green Tax Surcharge means importers would enjoy only a modest net reduction.
He added that the policy would still lower clearing costs, encourage legitimate importation through Nigerian ports and discourage some forms of vehicle smuggling.
Industry welcomes policy, seeks broader reforms
National President of the Association of Motor Dealers of Nigeria (AMDON), Ajibola Adedoyin, described the reduction as significant, saying it would improve affordability and stimulate activities in the automotive sector despite the Green Tax.
Former acting National President of the Association of Nigerian Licensed Customs Agents (ANLCA), Dr Kayode Farinto, also praised the government, saying the decision would ease the burden on consumers by substantially reducing clearing costs, according to a report by Daily Sun.
Farinto defended the Green Tax, stressing that it aligns with Nigeria's environmental goals and noted that electric vehicles already enjoy zero import duty under the current policy.
Similarly, National President of the Africa Association of Professional Freight Forwarders and Logistics of Nigeria (APFFLON), Frank Ogunojemite, urged the government to address structural challenges affecting imports.
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He maintained that tariff reductions alone cannot lower vehicle prices unless exchange rate volatility, logistics costs, terminal handling charges and port inefficiencies are simultaneously tackled.
Stakeholders also urged the government to closely monitor implementation to ensure the benefits of the new policy reach consumers instead of being absorbed by supply chain inefficiencies.
FG releases import prohibition list
Legit.ng earlier reported that the Nigerian government has updated its list of items not allowed to be imported into the country, with cement, soaps, fertiliser and 14 other goods and products on the list.
The development was announced in a circular issued by the Ministry of Finance and signed by former Minister of Finance and Coordinating Minister of the Economy, Wale Edun, following presidential approval of the 2026 fiscal policy measures.
The document, which was quoted in Punch, stated that the revised measures became effective from April 1, 2026, under the ECOWAS Common External Tariff guidelines.
Source: Legit.ng
