Dealers Raise Concern as Rising Forex Rates, Customs Duties Crush Tokunboh Vehicle Imports

• The depreciation of the naira against the dollar and rising customs duties have forced the price of Tokunboh cars to go higher
• Motor dealers have highlighted some of the factors that have significantly slowed the vehicle import business
• They warn the situation would force many to resort to buying old vehicles, which would lead to more vehicle breakdowns on the road

Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the stock market.

The naira's depreciation against the U.S. dollar has caused a rise in Customs duties and related taxes at the nation's seaports.

As a result, importers of used vehicles, commonly referred to as Tokunbo, have expressed difficulties in bringing cars into the country.

It is worth noting that since the naira's floating, the Central Bank of Nigeria (CBN) has reviewed the exchange rate used for customs duty on multiple occasions.

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It would be recalled that Legit.ng earlier reported that Nigeria’s import bill on imported used vehicles dropped by 83% yearly to N138.62 billion in the first half of 2024 from N819.15 billion in the same period in 2023.

Naira crash cripples Tokunbo car imports

Addressing journalists, the President of the Association of Motor Dealers of Nigeria (AMDON), Prince Ajibola Adedoyin, highlighted that increased taxes, petrol prices and tariffs have significantly slowed the vehicle import business.

He explained that the federal government's naira floatation and fuel subsidy policies have negatively impacted vehicle imports at Nigerian ports.

According to Leadership, Adedoyin added that many importers have been driven out of business, with severe consequences for their members.

He noted that a major concern for the general public is the potential safety risks, as the current situation has led to the recycling of old cars already in use within Nigeria. This could pose significant safety issues in the long run.

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He said:

“Importers can no longer bring in fairly used cars due to high foreign exchange rate. Apart from exchange rate, increase in import duty, which we have made it clear to government to do something about it. The hikes have adverse effects on our members because it has chased some of them away from the business. Even when you buy a car and sell it at a profit, you cannot buy another one with the current price of Importation and that is why some people left the business."

He further disclosed that importers have turned to recycling old and used vehicles due to the sharp decline in vehicle imports. However, Adedoyin cautioned that this practice could lead to more frequent accidents and vehicle breakdowns.

The rising foreign exchange (FX) rate has significantly increased import duties, making them skyrocket. He cautioned that if the government does not act, the higher exchange rates, transportation costs, and public safety will be at serious risk.

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Customs grants 90-day grace to vehicle Importers

Meanwhile, Legit.ng earlier reported that the Nigeria Customs Service had introduced a 90-day window for importers to resolve vehicle importation problems.

This adjustment process involves meticulously completing all importation paperwork and inspections to ensure compliance with the standards set by the federal government.

The initiative aims to proactively improve compliance and optimise import procedures within the country.

Source: Legit.ng