The value of used vehicles imported into Nigeria fell by 47 percent in 2022 to N325.05 billion, when compared to N617.48 billion worth of used vehicles brought into the country in 2021, foreign trade data from the National Bureau of Statistics (NBS) have shown.
According to NBS, used vehicles, with diesel or semi diesel engines worth N72.32 billion were imported in the first quarter of 2022, N96.76 billion in the second quarter, followed by N90.77 billion in the third quarter, as well as N65.19 billion in the last quarter of last year, which all amounted to N325.05 billion.
In 2021, vehicle dealers imported N174.22 billion worth of used vehicles in Q1 2021; N172.07 billion in Q2, 2021; N185.41 billion in Q3 2021, and N85.77 billion in Q4 2021, amounting to N617.48 billion.
Vehicles dealers attributed the sharp decline in used vehicles imports to the high import duty levied on used vehicles and foreign exchange crisis.
“A lot of Nigerians now hesitate to splash huge amounts of money on cars. The forex scarcity and import duty have made most of these vehicles to be expensive. You will have to sell the ones in your park before importing new ones,” Elijah Oluwadiya, manager, Automart Cars Limited, Benin City, said.
In April 2022, the Nigerian Customs Services announced it would migrate from the older version of the ECOWAS Common External Tariff (2017-2021) to the latest version which is 2022 to 2026. Under the new version, a duty rate of 20 percent was imposed on used vehicles imported into the country.
There is the National Automotive Council (NAC) levy of 15 percent, and added with the Value Added Tax of 7.5 percent, almost 50 percent levy is now paid on used vehicles imported into the country.
Corroborating the above, Segun Abiodun, a clearing and forwarding agent based in Apapa, Lagos State, said the high import duty has caused a sharp decline in the level of activities processed monthly by clearing and forwarding agents in Nigeria.
“The problems with the decline in used vehicles imports are high import duty and forex scarcity. Take for instance Highlander 2008 to 2010 series, we used to pay about N520,000 to clear it from the ports. That is not the case now. We spend almost N2 million to clear the same vehicle now. How many people can afford that?’’ he said.
In 2020, dealers imported N718.82 billion worth of used vehicles into the country while in 2019, a total of N580.13 billion was spent on used vehicles imported into Nigeria.
Further, the forex crisis contributed its share to the decline, our findings have shown. With the Central Bank of Nigeria unable to meet the foreign exchange demands of the Nigerian business community, leading to forex scarcity, the naira depreciated against the dollar at the parallel market, constraining many importers from bringing in the desired level of used vehicles.
The intensity of the pressures on the naira manifested towards the end of 2022 when it crashed to N730/$ and N1005/£ at the parallel market.
According to another car dealer who did not want his name mentioned, some car dealers have improvised by trading in Nigerian used cars, which customers find more affordable.
“Some of these cars were used in Nigeria. We need to remain in business. Once we see a Nigerian that wants to sell his vehicle we buy and refurbish, and then offer them for sale. They are more affordable to most Nigerians,” he said.
