Nigeria's automobile market is poised for a major shift after the Federal Government reduced import duties on both new and used vehicles, a move expected to make cars more affordable and stimulate economic activity. However, automobile dealers have cautioned that Nigerians may not experience immediate price reductions, as many vehicles currently in dealerships were imported under the previous, higher duty rates.
Government reduces import duties
The revised tariff regime was announced by the Comptroller-General of the Nigeria Customs Service, Bashir Adeniyi, while defending the agency'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% to 5%, while the duty on brand-new vehicles has been cut from 20% to 10%. According to Adeniyi, the adjustment is designed 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.
Dealers explain why prices won't fall overnight
Chief Executive Officer of Lekjam Auto Nig Ltd, Ayoade Olamilekan, described the policy as a positive development that would improve the purchasing power of many Nigerians seeking to own vehicles, according to a report by the News Agency of Nigeria (NAN). He noted, however, that the impact on retail prices would not be immediate because many dealers had already imported vehicles before the tariff reduction took effect. According to him, consumers are more likely to begin seeing lower prices within the next two to three months as fresh shipments cleared under the new duty rates enter the market.
Similarly, Olusegun Oketoyin of OloruntoFunmi Motors said dealers would first need to sell existing inventory acquired at the old tariff rates before fully passing on the savings to customers.
Demand expected to rise despite currency concerns
Kano-based dealer Aminu Abdullahi believes the lower import duties will boost demand for brand-new vehicles by making them more affordable and giving buyers greater confidence when purchasing imported cars. Idris Umar also welcomed the government's decision but warned that the continued depreciation of the naira against major foreign currencies could significantly reduce the benefits of the duty cuts. Since many vehicles are sourced from Europe and other overseas markets, he said exchange rate fluctuations remain one of the biggest determinants of final vehicle prices in Nigeria.
Manga Muhammed, Chief Executive Officer of Manga Automobiles, echoed similar sentiments on social media, explaining that dealers who paid the old import duties would initially seek to recover their investment before adjusting prices. He added that vehicles with larger engine capacities could still attract higher costs under the revised policy.
Experts urge caution
Industry experts have also advised Nigerians to moderate expectations. Eugene Nweke, Head of Research at the Sea Empowerment and Research Centre (SEREC), warned that sudden fiscal policy changes without sufficient notice could disrupt commercial planning, distort contractual obligations and weaken investor confidence. Meanwhile, Okey Ibeke, Principal Consultant at International Trade Advisory Services Ltd., said lower import duties alone would not automatically make vehicles significantly cheaper. According to him, the exchange rate, customs valuation, port charges, shipping costs and other taxes still account for a substantial portion of the total cost of importing vehicles into Nigeria.
While the government's tariff reduction is expected to provide long-term relief for motorists and dealers, industry stakeholders agree that its full impact will depend on currency stability and the broader cost of doing business.
