Findings by Shipping Position Daily has revealed that Nigeria’s importation of used vehicles, commonly known as ‘tokunboh,’ has seen a staggering 83% decline, dropping from N819.15 billion in the first half of 2023 to just N138.62 billion in the same period of 2024.
This dramatic decrease is attributed to a combination of high import tariffs, stringent Customs policies, and ongoing clearance challenges, significantly impacting the automotive industry and the livelihoods of many involved in vehicle trading.
According to a recent report from the National Bureau of Statistics (NBS), imports bill on used vehicles in Nigeria dropped by 83 percent to N138.62 billion in the first half of 2024, compared to N819.15 billion in the corresponding period in 2023.
A quarter-on-quarter analysis reveals that no used vehicle was imported in the first quarter of 2024, a sharp contrast to the N69.23 billion worth of used vehicles imported during the same quarter in 2023. In the second quarter of 2024, the value of imported used vehicles reached N138.62 billion, marking an 81.5% decline year-on-year from N749.92 billion in the second quarter of 2023.
The NBS report indicate that the majority of the used vehicles were sourced from the United States, with total imports from America in the second quarter of 2024 amounting to N971.84 billion. The drastic reduction in vehicle imports coincides with the federal government’s introduction of new taxes on imported vehicles and other measures aimed at regulating the automotive market.
The combination of high import tariffs, the challenges of foreign exchange fluctuations, and stringent government policies have severely impacted the importation of used vehicles. Freight forwarders and importers have expressed concerns that these factors are discouraging trade, leading to a significant downturn in the market.
Our correspondent who visited the Mile 2 Extension Auto Terminal and the Ports & Terminal Multipurpose Limited (PTML) Terminal last week, observed that the usually fully-occupied terminals are now deserted with a large expanse of land with few yet-to-be-cleared used automobiles seen in the terminals.
Recall that the Ports & Terminal Multipurpose Limited (PTML) had earlier blamed high import duty and taxes on used vehicles for the 60 per cent drop in importation which it experienced in the first half of 2024.
A document signed by the General Manager of PTML, Mr Tunde Keshinro, showed that vehicle importation dropped from 45,000 units of vehicles in the first half of 2023 to 18, 000 units in the corresponding period this year.
Speaking with our correspondent last week, the National Public Relations Officer of the Association of Registered Freight Forwarders of Nigeria (AREFFN), Taiwo Fatomilola lamented the significant decline in vehicle importation, attributing it to high import tariffs, foreign exchange challenges, and government policies.
According to Fatomilola, the number of ships arriving in Nigeria with imported vehicles has drastically reduced, with a previous average of three ships per month carrying about 2,000 vehicles, including cars, trucks, and other machinery. Currently, he said it is common for only one ship to arrive over a three-month period, bringing in a paltry 300 vehicles.
Fatomilola alleged that Customs valuation practices and policies, particularly under the General Agreement on Tariffs and Trade (GATT), are affecting trade negatively. He also added that Customs delays and bureaucratic checks have driven up costs, as the multilayered process involves assessments at multiple checkpoints, discouraging agents from continued involvement due to repeated valuation checks.
The AREFFN spokesman also pointed out that there is a 20% import duty based on a 2015 valuation benchmark, which applies even to older vehicles. This means that regardless of whether a vehicle is from 2001 or 1979, it is taxed as if it were from 2015. The resulting duty costs can easily reach N900,000 to N1,000,000 or more, with inconsistent rates between terminals compounding the issue.
“Before now, three ships per month arrived at the ports, carrying about 2,000 vehicles, including cars, trucks, and other machinery. Now, within three months, only one ship might arrive, carrying just around 300 vehicles.
“There’s Article 7 of GATT under the World Customs Organization, which establishes valuation agreements, but Customs delays and bureaucratic checks further drive-up costs. When profits are no longer viable, importers will be reluctant to continue,” Fatomilola lamented.
On his part, the Tin Can Chapter Public Relations Officer of the Association of Registered Freight Forwarders of Nigeria (APFFLON) Mr Clinton Okoro noted that importation of vehicles through Nigeria’s RoRo ports, particularly Tin Can port has faced severe challenges over the past year, leading to a drastic decline in operations.
Okoro noted that the rate of vehicle importation has drastically dropped, primarily due to high tariffs and complex customs procedures. He said many vehicles have remained stuck at the ports as major importers struggle to clear them.
He highlighted that the situation was exacerbated by a system that relies heavily on standard Vehicle Identification Numbers (VINs), leading to difficulties for vehicles with non-standard VINs, particularly those imported from Europe.
Okoro informed that the introduction of a new Customs code, 846, aims to address these challenges by allowing for the importation of non-standard vehicles. However, he stressed that the process remains cumbersome, requiring importers to apply for permissions and approvals through various channels, including at the Customs headquarters in Abuja.
Despite these hurdles, Okoro expressed optimism about gradual improvement in operations, noting that recent developments indicate a revival in shipping activity, with more vessels beginning to arrive at the ports. He attributed this improvement to the implementation of the 846 code, which has eased some of the burdens faced by importers.
While there is a sense of hope for a recovery, Okoro reiterated the need for a more streamlined process and reconsideration of the current tariff regime. He believes that without addressing the high duties and improving customs operations, the challenges in the vehicle importation sector will persist, making it difficult for businesses to thrive in the current economic landscape.
“The rate of vehicle importation has dropped drastically. It was as bad as even having about just only eight entries for a day in 2024. Without addressing the high duties and improving customs operations, the challenges in the vehicle importation sector will persist.” Okoro said.
