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•Insist FX volatility, logistics crisis remain stumbling blocks
•Say importers could save N700,000 per vehicle if well implemented
The federal government’s decision to slash import levies on new and used vehicles has been welcomed by players in the automotive and maritime sectors, but stakeholders have warned that the gains could be eroded by exchange rate volatility, high port charges and persistent inefficiencies in cargo clearance.
The revised levy regime, which took effect alongside the implementation of the Green Tax Surcharge on July 1, forms part of the federal government’s 2026 Fiscal Policy Measures aimed at lowering the cost of vehicle importation, stimulating trade and supporting economic activities.
Under the new policy, the import levy on brand-new vehicles has been reduced from 20 per cent to 10 per cent, while the levy on used vehicles, popularly known as Tokunbo vehicles, has been cut from 15 per cent to five per cent.
Industry operators said the reduction could lower vehicle clearing costs by as much as 45 per cent and save importers more than N700,000 on a typical passenger car, provided the policy is fully implemented.
For instance, stakeholders explained that clearing a Toyota Camry of a certain age bracket previously cost about N4 million, but the amount is now expected to drop to between N3.2 million and N3.3 million under the new tariff structure.
Despite the optimism, importers, freight forwarders and vehicle dealers insisted that the levy reduction alone would not significantly reduce vehicle prices unless the government also tackles the country’s volatile foreign exchange market, multiple port charges, terminal handling fees, logistics costs and delays in cargo clearance.
According to them, the exchange rate, which has continued to fluctuate between N1,400 and N1,500 to the dollar, remains one of the biggest factors influencing the final landing cost of imported vehicles.
They warned that unless these structural challenges are addressed, the benefits of the tariff reduction may not be fully transferred to consumers.
Industry operators also recalled that a similar reduction in import duty introduced during the administration of former President Muhammadu Buhari had little effect on vehicle prices because exchange rate depreciation and other import-related costs wiped out the expected gains.
A Lagos-based car dealer, Sunny Madubuko, described the levy reduction as a positive policy but argued that Nigerians should not expect dramatic reductions in vehicle prices.
“We had a similar policy under the former President Muhammadu Buhari but at the end of the day, the prices of imported cars were high and extremely out of the purchasing power of ordinary Nigerians instead of the price to come down and make cars affordable.
“The reduction in import duty only appears positive on paper, consumers may not experience substantial price relief because several other costs associated with importing vehicles remain unchanged and are not addressed,” he said.
Also speaking, Managing Director of Mikky Excellency Nigeria Limited and customs broker, Alhaji Abdulazeez Babatunde Mukaila, said the reduction extends beyond vehicles, noting that the government reviewed duties on hundreds of imported items.
According to him, about 127 items benefited from duty reductions, while duties on approximately 192 other products were increased under the new fiscal measures.
He explained that although used vehicle levy had been reduced from 15 per cent to five per cent and new vehicle levy from 20 per cent to 10 per cent, the introduction of the Green Tax Surcharge slightly reduced the overall benefit.
“Don’t forget, too, that a green tax has been introduced. 10% off on Tokunbo cars and 4% was introduced, so invariably we only have a 6 per cent discount.
“If you ask me on brand new cars or big cars, it shows that the government is thinking while duty is being reduced back to zero on machinery for mining, for construction for manufacturing duty has been taken away from 5% to 0% so in the long run the government wants construction and development to go on so it is a welcome development,” he said.
Mukaila noted that the policy would substantially reduce clearing costs for importers.
According to him, the lower levy could also encourage more importers to channel vehicles through approved ports instead of relying on smuggling.
“But as we all know we might only reduce smuggling. Those who want to smuggle and evade duty don’t see these marginal discounts as anything as far as they are concerned but to a very good trader, an honest trader it is an opportunity to get more customers by giving some discounts.
“So, I expect it to suppress smuggling for some of them to have a change of heart and see the opportunity of what the reduction can bring forward,” he said.
The National President of the Association of Motor Dealers of Nigeria (AMDON), Ajibola Adedoyin, also welcomed the development, saying it would improve affordability and boost activities in the automotive sector.
“From our knowledge, it was reduced by 10%; I think it is significant enough. And so, it is tangible, and it is a welcome idea. It is going to grant access and affordability towards the automotive industry. It is a welcome idea to us, and it is part of what we have been telling the government to do so that the transportation sector can have some respite.
“However, you should be equally aware of the introduction of the greenhouse surcharge. But I was just told that it is 2%. So, invariably, in our sector, what they reduce now should be 8%. But we still know that 8% will still make at least some little difference in the overall pricing of the car. So, we are really happy about it, and it is a welcome idea.”
On smuggling, Adedoyin said lower duties would reduce the incentive for illegal importation, although foreign exchange remained beyond the control of dealers.
“We use dollars and pounds and other foreign currencies to buy cars to ship them. So, on that one, I don’t think that any dealer or any importer has anything they can do on that one. But the one that makes a difference is the clearing process, which has to do with the duties and levies. So, if it comes down, yes, it will encourage people to bring in more and reduce that same smuggling.”
Former acting National President of the Association of Nigerian Licensed Customs Agents (ANLCA), Dr. Kayode Farinto, commended the federal government for responding to industry calls for lower import duties.
“The first thing I want to say is to commend the government because I’m one of those who are mounting pressure on the need for the federal government to review the import duties on used vehicles and new vehicles. “I am delighted that we have a listening government. So, I want to commend the government for doing that because it is going to ameliorate the suffering of the masses.”
He added that the reduction would lower vehicle prices by cutting clearing costs by about 45 per cent, translating into savings of more than N700,000 per vehicle.
Defending the Green Tax Surcharge, Farinto said the policy aligns with Nigeria’s environmental commitments and the government’s push for cleaner transportation.
“Let me interject. Nigerians would like to take only from the government. We don’t want to give. This government, in its magnanimity, has removed the duty on all electric vehicles.
“You will not pay a dime to the federal government and that is President Bola Tinubu’s policy.”
He maintained that the surcharge was not an additional customs duty but an environmental measure intended to encourage the importation of cleaner vehicles, noting that electric vehicles already enjoy zero import duty.
Similarly, National President of the Africa Association of Professional Freight Forwarders and Logistics of Nigeria (APFFLON), Frank Ogunojemite, said the success of the policy would ultimately depend on whether it translates into lower business costs and more affordable goods.
“The difference today is that tariff reduction alone cannot deliver the desired economic outcome. Exchange rate volatility, multiple port charges, logistics costs, terminal handling charges, and delays in cargo clearance remain major determinants of the final cost of imported goods. “Unless these bottlenecks are simultaneously addressed, the benefits of tariff reductions may not be fully felt by businesses or ordinary Nigerians,” he stated.
He urged the federal government to closely monitor implementation to ensure that the gains from the tariff reduction are passed on to consumers rather than being swallowed by supply chain inefficiencies.
“Nigerians expect to see the benefits beyond policy documents.
“Reduced tariffs should ultimately lead to lower landing costs, increased import activities, improved business confidence and more affordable products for consumers,” Ogunojemite added.
