Import of Used Cars to Nigeria Declines by 83% in H1 2024

The National Bureau of Statistics (NBS) has reported a significant decline in Nigeria's import bill for used cars, commonly known as "tokunbo," in the first half of 2024 (H1’24). The value of imported used cars dropped by 83% year-on-year (YoY) to N138.62 billion, compared to N819.15 billion in the first half of 2023 (H1’23).

According to the NBS’s Commodity Price Indices and Terms of Trade (ToT) report, the breakdown reveals that no used cars were imported in Q1’24, whereas Q1’23 recorded N69.23 billion worth of used car imports. In Q2’24, the import value for used cars fell by 81.5% year-on-year, dropping from N749.92 billion in Q2’23 to N138.62 billion.

The report further highlights that the United States was the primary source of these used car imports, with total imports from the U.S. amounting to N971.84 billion in Q2 of 2024.

This drastic reduction in car imports follows the Nigerian government's decision to impose additional taxes on imported vehicles last year. The new tax law stipulates that vehicles with engine capacities between 2000 and 3999cc are subject to a 2% Import Adjustment Tax (IAT) levy on the vehicle's value, while vehicles with engines larger than 4000cc are taxed at 4%. This levy is in addition to the 35% import duty and 35% levy already applied to imported vehicles.

However, vehicles with engine capacities smaller than 2000cc, as well as mass transit buses, electric vehicles, and locally manufactured cars, are exempt from the IAT levy. This policy change has likely contributed to the sharp decline in the importation of used cars, as the cost of importing vehicles into the country has risen significantly.