Used vehicles importation into Nigeria fell to N69.49 billion at the end of the first quarter of this year, a development that was in sharp contrast to the trend seen in the corresponding quarters of 2021 and 2022.

Past used vehicles import data showed that Nigerian car dealers as of March 2021 imported N174.22 billion worth of used vehicles, with diesel or semi diesel engines having cylinder capacity greater than 2500cc.

By March 2022, importation of used vehicles amounted to N72.32 billion. This implies that when compared to the first quarter of 2022, used vehicles imports at the end of the first quarter of 2023 fell by 4 percent while in comparison to the first quarter of 2021, the importation of used vehicles fell by 60 percent.

A clearing and forward agent, Bolu Oluwasola attributed the trend to the high exchange rate, Vehicle Identification Number (VIN) and the National Automotive Council levy (NAC Levy).

“Accessing US dollars was better in the first quarter of 2022 unlike in 2023. It exchanged for most part of the first quarter of this year at about N700/$, which in addition to VIN, NAC levy and other costs, the landing cost of those imported vehicles will be too expensive for the nation’s middle class, and as a result, many importers have scaled down the number of vehicles imported. Yes, it has to do with levies and other charges,” Oluwasola said.

According to the findings by the Nigerian Observer, the official exchange rate of the naira to the US dollars depreciated in the last two years. Using the official exchange rates as provided by the Central Bank of Nigeria, the naira was exchanged at an average rate of N459.48 to the US dollar throughout 2023.

It was exchanged at an average rate of N423.40 to the US dollar in 2021 and N399.14 to the US dollar in 2021, corresponding to higher import cost on used vehicles brought into the country.

And if fully implemented, the Fiscal Policy Measures 2023 is likely to cause a further reduction in used vehicles importation into the country, unless the policy is temporarily suspended to address the concerns raised by stakeholders, according to PwC Nigeria.

According to the document, the Fiscal Policy Measures 2023 introduced a Green Tax Surcharge for the years 2023 and 2024 in the “form of additional Import Adjustment Taxes on motor vehicles” including those with engine size between 2000cc to 3999cc at the rate of two percent, and 4000 cc above at the tax rate of four percent.

“Vehicles with engine capacities below 2000 cc, mass transit buses, electric vehicles, locally manufactured vehicles and other specified vehicles are excluded from this tax,” PwC Nigeria said.

The Green Tax Surcharge is in addition to the ECOWAS Common External Tariff which is 20 percent; the National Automotive Council (NAC) Levy that is 15 percent as well as the Value Added Tax of 7.5 percent paid on every vehicle imported into Nigeria.