Slashed Tariff Causes Rise In Importation Of Used Cars

Slashed Tariff Causes Used Car Import To Rise
  • Car Dealers Ship 2,650 Units In March

Following the reduction of import duty on imported vehicles by the Federal Government, car dealers are flooding the market with used vehicles, popularly called Tokunbo.

Many of them who have placed orders and will receive 2,650 units of used vehicles from Nigeria’s seaport in March, according to the Nigerian Ports Authority’s (NPA) Shipping Position obtained by BizWatch Nigeria.

About 750 units have already arrived the shores of the country as the ships conveying them berth at Port and Terminal Multiservices Limited terminal in Tin Can Island on March 9.

Another vessel billed to arrive in the country on March 15 is carrying 400 units of used cars also through the Tin Can Island.

The NPA report stated that the dealers are also expecting to receive 750 units of different brands of used cars on March 17 at the PTML terminal.

On March 20, 350 units of used cars are billed to arrive the country while another 400 units will be shipped in on March 24.

Checks showed that no used vehicle came into the country through the seaports in January and February this year.

New Import Duty

One of the amendments in the Finance Act 2020 signed into law by President Muhammadu Buhari In December last year is the reduction of import duty vehicles used for transportation of people and tractors used for farming.

Import duty on tractors was slashed from 35 percent to five percent; duty on mass transit vehicles for the transport of more than 10 persons and trucks from 35 percent to 10 percent, and reduction of import levy on cars from 30 percent to five percent.

The Nigeria Customs Service (NCS) announced the commenced of the implementation of tariff reduction on vehicles last month following a directive from the Ministry of Finance, Budget and National Planning.

The NCS Comptroller-General, Hameed Ali, noted that the new law would help the country to have vehicles meant for transportation with reduced duty for the benefit of Nigerians.

Push back by makers of brand-new cars

Automobile assembling companies have kicked against the new tariff, saying it would destroy their investments.

The Chairman, PAN Nigeria Limited, Ahmed Aliyu; Chairman, NAMA, Tokunbo Aromolaran, and other stakeholders alleged that the Customs was out to intentionally kill Nigeria’s automobile industry.

They described the tariff reduction as policy somersault and that Nigeria would soon become a dumping ground for all kinds of vehicles.

This, according to them, will lead to massive lay-off of workers and will further worsen the economic situation in the country.

The Chief Executive of GIG Group, owners of the God Is Good Transport Company, Mr. Ajaere, said the sudden change in policy by the government allegedly without consultation had sent the wrong signal to prospective investors in the sector.

Ajaere while speaking at the Nigeria Economic Summit in Abuja last year narrated a personal experience on the impact of the inconsistencies in government policies in the country.

Following the announcement of a policy to encourage the private sector to go into local manufacturing of automobiles, he said GIG Group decided to go into partnership with some foreign investors three years ago to invest in the building of a plant for the manufacturing of ‘Made in Nigeria’ vehicles.

According to him, the group spent over N5 billion of private funds, without any loans from the banks, to build the vehicle assembly plant.

He said the government’s decision, without consultations, to cut the duty on imported vehicles from 35 percent to five percent appeared to have put the project in disarray, as the partners did not know what purpose the sudden policy somersault was meant to serve.

About Author

Ife Ogunfuwa is an award-winning reporter who is versed in reporting business and economy, technology, gadgets reviews, telecoms, tax, and business policy review, among others. She loves telling stories behind the numbers. She has professional certifications in business and financial reporting. You can reach her via – [email protected]

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