Vehicle Prices May Drop as FG Slashes Import Duties, Dealers React

Some automobile dealers have expressed mixed reactions to the Federal Government's revised tariff regime, which includes a reduction in import duties on vehicles, saying while the policy is expected to reduce vehicle prices over time, its full benefits will depend largely on exchange rates and other import-related costs.

The dealers spoke with the News Agency of Nigeria (NAN) on Sunday in Abuja.

The revised tariff regime was announced by the Comptroller-General of the Nigeria Customs Service (NCS), Bashir Adeniyi, while defending the Service's 2026 budget proposal before the House of Representatives Committee on Customs and Excise.

Under the new policy, import duty on used vehicles has been reduced from 15 per cent to five per cent, while the duty on brand-new vehicles has been lowered from 20 per cent to 10 per cent.

According to Adeniyi, the reduction is intended to cushion the impact of the Green Tax Surcharge, encourage the importation of cleaner vehicles and support broader economic activities under the Federal Government's 2026 fiscal policy.

Reacting to the development, Ayoade Olamilekan, Chief Executive Officer of Lekjam Auto Nig Ltd., described the policy as a positive step that would make vehicle ownership more affordable for ordinary Nigerians.

He, however, noted that consumers should not expect immediate reductions in prices because many dealers are still selling vehicles imported under the previous duty regime.

Although implementation of the revised tariff began in May, Olamilekan said it could take between two and three months before the impact becomes visible in the market.

"We are all happy; we want everybody to have cars," he said.

Also speaking with NAN, Olusegun Oketoyin of OloruntoFunmi Motors commended the government's decision but explained that dealers must first dispose of existing inventory purchased at the old duty rates before lower prices can be reflected.

In Kano, automobile dealer Aminu Abdullahi said the reduction could encourage more Nigerians to purchase brand-new vehicles while reducing concerns over customs-related issues during road checks.

Another dealer, Idris Umar, described the policy as a welcome development but warned that the persistent depreciation of the naira against major foreign currencies could significantly reduce its expected benefits.

He explained that since most vehicles are imported from Europe and paid for in foreign currency, exchange rate volatility remains one of the biggest challenges facing the industry.

Meanwhile, Manga Muhammed, Chief Executive Officer of Manga Automobiles, said in a post on his verified social media account that although lower duties would eventually reduce vehicle prices, automobiles with larger engine capacities could become more expensive under the revised policy.

He added that dealers who had already cleared vehicles using the previous tariff would naturally seek to recover their investments before adjusting prices downward.

Industry experts also offered words of caution over the policy's implementation.

Eugene Nweke, Head of Research at the Sea Empowerment and Research Centre (SEREC), said frequent fiscal policy changes without sufficient notice could create uncertainty for importers and investors.

According to him, abrupt policy shifts can distort existing commercial agreements and weaken investor confidence in the sector.

Similarly, Okey Ibeke, Principal Consultant at International Trade Advisory Services Ltd., said lower import duties alone would not automatically translate into cheaper vehicles for consumers.

He explained that the final cost of imported vehicles is influenced by several other factors, including the naira exchange rate, port charges, customs valuation, shipping costs and other statutory taxes.

According to Ibeke, unless these additional cost drivers are also addressed, the reduction in import duties may have only a limited impact on the retail prices ultimately paid by Nigerians.

NAN