KEY POINTS

• Auto industry stakeholders said FG’s tariff cut from 70 to 40 percent will not lower car prices because forex and logistics costs dominate.
• The current 40 percent regime has been in place since a 2023 executive order, with the new announcement merely regularising the existing rate.
• A new green tax adds 2 percent to 4 percent surcharges on petrol engines above 2.0 liters, partly offsetting any tariff relief.

Nigerian car buyers should not expect cheaper vehicles despite the federal government’s reduction of import tariffs from 70 percent to 40 percent, industry stakeholders said on Thursday, arguing that forex volatility and a thick mix of port and logistics costs will swallow any duty savings.

The stakeholders said the policy itself is not new and that prices have already absorbed the lower duty since a 2023 executive order set the 40 percent regime. The latest announcement, they said, merely regularises that rate within the medium-term plan.

Now the message lands as Nigerians struggling with cost-of-living pressures had expected the tariff cut to translate into showroom relief, only to encounter the durable mechanics of an import-dependent vehicle market.

Why the cut won’t move prices

Specifically, the naira’s depreciation since 2022 has eroded any savings the 30-percentage-point duty cut might have delivered. Importers say the exchange rate shock alone has more than offset the lower tariff, leaving showroom prices flat or higher.

Indeed, multiple layers of dollar-denominated charges add to the inflation. Clearing fees, port handling charges, shipping costs and other statutory levies have either held steady or risen since 2022, blunting tariff-driven savings.

Moreover, local vehicle assembly capacity remains thin. Without scaled and competitively priced domestic production, Nigeria continues to lean on imports, magnifying the country’s exposure to forex movements and global vehicle inflation.

Industry voices push back

Furthermore, Kunle Jaiyesimi, Deputy Managing Director of CFAO Mobility, said there was no fresh reduction in tariff. He explained that the 2021 Medium-Term Plan imposed a 35 percent duty plus a 35 percent levy, totaling 70 percent, before a 2023 executive order under the current administration cut it to 40 percent.

“The 40 per cent executive order, which reduced the 70 per cent duty and levy, is what the government is trying to regularise through the new medium-term planning,” Jaiyesimi said.

Additionally, Jaiyesimi flagged a green tax surcharge that pushes prices the other way, with 2 percent on 2.0-liter petrol engines and 4 percent on 4.0-liter engines, partly cancelling the optics of tariff relief.

Mamudu warns on local assembly

Meanwhile, Luqman Mamudu, mobility expert at Transtech Industrial Consulting and former adviser to the Nigerian Government on Automotive Industry Development, said the tariff differential was originally designed to favor locally assembled vehicles. Cutting that differential, even with good intentions, risks tilting the market back toward imports.

“Tariffs are not the primary driver of high vehicle costs in Nigeria. Exchange rate depreciation, forex scarcity, port and logistics charges, shipping costs, inflation, and rising global vehicle prices are far more significant factors,” Mamudu said.

However, Mamudu noted that the Finance Act 2020 stripped commercial vehicle assembly of similar protection and did not deliver meaningful price reductions, with several operators reverting to full importation instead. That outcome, he said, should guide current thinking.

Together with the green tax, the local-assembly contraction risk and persistent forex pressure, the tariff announcement looks more like a regulatory tidy-up than a cost-of-driving rescue. Mamudu added that the National Automobile Manufacturers Association and similar bodies need to coordinate stronger advocacy so policy reflects on-the-ground realities.

Whether the tariff cut catalyses meaningful price relief will depend on naira stability, port reforms and the speed at which local assembly scales under AfCFTA. Yet for now, the showroom math suggests Nigerians can expect new sticker prices to stay stubbornly high through the rest of the year.