Rising Costs and Import Challenges Drive Demand for Nigerian-Used Cars
The rising costs of living, high exchange rates, and increasing import tariffs have significantly impacted the affordability of foreign-used cars in Nigeria. As a result, many Nigerians are turning to locally pre-owned vehicles as a more viable option. This shift has led to a surge in the Nigerian-used car market, with private owners listing their vehicles on online platforms, social media, and roadside lots.
This trend has been observed by various stakeholders in the automotive industry. Car dealers have noted that while foreign-used vehicles—commonly referred to as Tokunbo—remain popular, their prices have nearly doubled or even tripled in the past year. This is largely due to the depreciation of the naira and the introduction of new import charges. The situation has also led to a decline in the volume of imported vehicles, as the government implemented a four per cent Free On Board (FOB) levy to replace the former one per cent Comprehensive Import Supervision Scheme (CISS) charge.
Impact of the New Levy on the Automotive Sector
The FOB levy was introduced as part of the Customs Act 2023 and is intended to fund operations such as the deployment of the B’Odogwu cargo clearance system. According to Adewale Adeniyi, Comptroller-General of the Nigerian Customs Service, the transition from CISS to FOB aims to modernise customs services and reduce clearance bottlenecks.
However, this change has had a significant impact on the market. Car dealers like Nurudeen Amodu have expressed concerns about the sharp increase in vehicle prices. For example, foreign-used Toyota models from 2003–2006, which previously sold for around N1.5 million, now cost between N8 million and N10 million. Similarly, the price of a Honda CR-V (2010) has risen from N5 million to N13 million, while a Lexus RX330 has jumped from N5 million to N15 million.
Amodu highlighted that the depreciation of the naira has made foreign-used cars more expensive than locally produced ones. He explained that some businesses have struggled to remain operational due to the increased costs. To mitigate this, dealers have started offering car swaps, where customers can trade in their old vehicles and add a small amount to purchase a newer model.
Increased Demand from Neighboring Countries
The growing demand for Nigerian-used cars has also attracted buyers from neighboring countries. In Sokoto, dealers report an influx of customers from Niger Republic, who find Nigerian-used vehicles more affordable due to the relative strength of the Nigerien currency against the naira. Haruna Abubakar, a car dealer in Sokoto, mentioned that he now has more customers from Niger Republic than local buyers.
Abubakar noted that popular models like Toyota Corolla, Camry, and Sienna are in high demand among these buyers. Mallam Jamiu Bello added that many Nigerien nationals not only buy vehicles but also request Nigerian number plates, which they use to drive the cars back home. This trend has boosted the local automobile market in Sokoto, despite ongoing economic challenges.
Shift in Consumer Preferences
In Lagos, car seller Sam shared similar sentiments, stating that people now prefer Nigerian-used cars over foreign-used ones due to higher customs duties and exchange rates. He cited examples of used cars being sold at significantly lower prices compared to foreign models. For instance, a 2013 Ford Escape in Cotonou is priced between 2.8 million and 3 million CFA, while in Nigeria, it is sold for between N11 million and N13 million.
Sam also mentioned that buyers from Benin Republic and Cameroon are increasingly purchasing Nigerian-used cars, as their currencies are stronger. This has further driven up the demand for locally sourced vehicles.
Call for Support for Local Assembly
Amid the challenges faced by the automotive sector, the Association of Motor Dealers of Nigeria (AMDN) has urged the federal and state governments to support locally assembled cars. National President Ajibola Adedoyin argued that promoting local production would reduce dependence on costly imports and create job opportunities.
Adedoyin emphasized the need for car manufacturers to produce affordable models that cater to average Nigerians. He pointed out that current models are often too expensive for low-income earners, making it difficult for them to afford vehicles even with loans. The association is working with the National Automotive Development Council to explore ways to make locally assembled cars more efficient and durable.
Economic Hardship and Vehicle Sales
Economic challenges have also forced many Nigerians to sell their cars. Olumide Adegbola, a private car owner, had to sell his vehicle due to financial difficulties. He explained that feeding his family had become a daily struggle, making it impossible to afford fuel for transportation. Another car owner, Yunusa, shared a similar experience, highlighting how hunger can push individuals to extreme measures to survive.
Perspectives from Customs Agents and Freight Forwarders
Customs agents and freight forwarders have also weighed in on the impact of the FOB levy. Pius Ujubonu, former Interim National President of the Association of Nigerian Licensed Customs Agents, warned that the policy could make vehicle acquisition a luxury for most Nigerians. He argued that the lack of exemptions for commercial or special-purpose vehicles would further exacerbate the problem.
Taiwo Fatobilola, National Public Relations Officer of the Association of Registered Freight Forwarders of Nigeria, noted that the seven per cent surcharge remains a concern, as it has not been removed despite assurances. Nnadi Ugochukwu, a member of the Elders Maritime Agents Association, described the FOB levy as an additional cost that is pushing businesses to the brink. He warned that this could lead to inflation and the closure of many businesses.
Stanley Ezenga, a member of the National Association of Government Approved Freight Forwarders, took a more cautious approach, suggesting that it is too early to assess the full impact of the FOB levy. He believed that while the policy may lead to inflation, it would not necessarily cause a drop in imports.