FG slashes vehicle import levy to 10% for new cars, 5% for Tokunbo: Dealers warn no immediate price drop

The Federal Government has cut import duties on new and used vehicles by half, but dealers and freight forwarders are telling Nigerians not to expect cheaper cars at the dealership just yet. The policy took effect on July 1 alongside the new Green Tax Surcharge under the 2026 Fiscal Policy Measures.

What the new tariff means for importers

Under the revised regime, the import levy on brand-new vehicles dropped from 20% to 10%, while the levy on used Tokunbo cars fell from 15% to 5%. Industry operators estimate the changes could reduce clearing costs by as much as 45%, saving importers over N700,000 on an average passenger car. For example, clearing a Toyota Camry that previously cost about N4 million is now expected to cost between N3.2 million and N3.3 million.

Lagos-based car dealer Sunny Madubuko recalled that a similar reduction under former President Muhammadu Buhari failed to make cars more affordable because currency depreciation wiped out the gains. According to him, while the policy looks good on paper, consumers may not see real price relief because other major import costs remain unchanged.

Exchange rate and hidden costs still bite

Stakeholders warned that the levy reduction alone will not translate into significantly cheaper vehicles unless the government also addresses exchange rate volatility, multiple port charges, terminal handling fees and delays in cargo clearance. With the naira fluctuating between N1,400 and N1,500 to the dollar, importers argued that foreign exchange remains the biggest factor determining final landing costs.

Managing Director of Mikky Excellency Nigeria Limited and customs broker Alhaji Abdulazeez Babatunde Mukaila disclosed that the government reviewed tariffs on hundreds of imported products. Duties were reduced on about 127 items while rates increased on roughly 192 others. He noted that although the levy on Tokunbo vehicles dropped by 10 percentage points, the new Green Tax Surcharge means importers will enjoy only a modest net reduction. He added that the policy will still lower clearing costs, encourage legitimate importation through Nigerian ports and discourage some forms of vehicle smuggling.

Stakeholders call for broader reforms

National President of the Association of Motor Dealers of Nigeria (AMDON), Ajibola Adedoyin, described the reduction as significant, saying it will improve affordability and stimulate activities in the automotive sector despite the Green Tax. Former acting National President of the Association of Nigerian Licensed Customs Agents (ANLCA), Dr Kayode Farinto, praised the government, saying the decision will ease the burden on consumers by substantially reducing clearing costs. Farinto defended the Green Tax, stressing that it aligns with Nigeria's environmental goals and noted that electric vehicles already enjoy zero import duty under the current policy.

National President of the Africa Association of Professional Freight Forwarders and Logistics of Nigeria (APFFLON), Frank Ogunojemite, urged the government to address structural challenges affecting imports. He maintained that tariff reductions alone cannot lower vehicle prices unless exchange rate volatility, logistics costs, terminal handling charges and port inefficiencies are tackled simultaneously. Stakeholders also urged the government to monitor implementation closely to ensure the benefits reach consumers instead of being absorbed by supply chain inefficiencies.

For the naira and Nigerian consumers, the policy is a positive signal, but the real test will be whether the government follows through on fixing the exchange rate and port bottlenecks that have kept vehicle prices high for years.