Nigeria’s expenditure on importing used vehicles, commonly known as *tokunbo* cars, significantly declined by 83% year-on-year in the first half of 2024. The import bill fell to N138.62 billion from N819.15 billion recorded during the same period in 2023, according to data from the National Bureau of Statistics (NBS).
A closer look at the quarter-on-quarter data from the NBS’s *Commodity Price Indices* and *Terms of Trade* (ToT) report shows that no used vehicles were imported in the first quarter of 2024. This contrasts with N69.23 billion worth of used vehicles imported in the first quarter of 2023. In the second quarter of 2024, imports resumed, totaling N138.62 billion, but this figure still represents an 81.5% year-on-year drop from the N749.92 billion imported in Q2 2023.
The majority of these vehicles were imported from the United States, with NBS reporting total imports from America amounting to N971.84 billion in the second quarter of 2024.
The decline in vehicle imports follows the federal government’s introduction of a new tax regime last year. Under the new policy, vehicles with engine capacities between 2.0 liters and 3.9 liters are subject to a 2% Import Adjustment Tax (IAT) in addition to the existing 35% import duty and 35% levy. Vehicles with engine capacities of 4.0 liters or more face a 4% IAT levy. However, vehicles under 2.0 liters, electric vehicles, mass transit buses, and locally manufactured vehicles are exempt from the IAT levy.
Additionally, the government revised its import prohibition list, banning the importation of vehicles older than 12 years from their year of manufacture. Despite this, the Nigeria Customs Service (NCS) suspended the 25% import duty penalty on improperly imported vehicles in March 2024.
The combination of stricter taxes, prohibitions on older vehicles, and recent regulatory changes have contributed to the sharp decline in the country’s import bills for used vehicles.
