As part of the 2026 fiscal policy measures, the Nigerian government has reduced vehicle import tariffs from 70 percent to 40 percent. Economic experts argue that this policy will boost the automotive business and strengthen the country’s broader economic stability.
The government says fully built units passenger motor vehicle, four-wheel drive motor vehicle and station wagon now attract a total effective tariff of 40 percent, a reduction from 70 percent. For years, high import duties and opaque regulatory frameworks have hindered the efficiency of the automotive trade across the country. Vehicle importers face a barrage of taxes, including Value Added Tax (VAT), the National Automotive Council (NAC) levy, Free-on-Board (FOB) levies, surcharges, and unpredictable terminal handling charges.
These multiple taxes, industry experts argue, undermine the cost of doing business within the automotive sector. By lowering the tariff from 70 percent to 40 percent, the government enables merchants to import more vehicles, effectively boosting the broader Nigerian economy where thousands of citizens depend on vehicles for their commercial livelihoods.
According to data from the National Bureau of Statistics (NBS), Nigerians spent over ₦4 trillion on the importation of passenger motor cars between 2023 and 2025. While passenger car imports were pegged at ₦1.47trillion in 2023, the rate declined by 14 percent to ₦1.26trillion in 2024. However, imports rose to ₦1.58trillion in 2025, marking a 24 percent increase and the highest peak in the three-year period. Experts attribute this eventual rise to exchange rate stabilisation and improved access to foreign exchange during that year.
On the other hand, the total imports of car transport equipment and parts experienced a massive surge. This aspect grew from ₦3.15trillion in 2023 to ₦4.77trillion in 2024, representing an increase of over 50 percent within a single year.
Dr. Bello Audu, a lecturer and innovation economist at Usmanu Danfodiyo University, Sokoto, told The Liberalist that the new policy can trigger a broader economic chain reaction aside from a reduction in the price of automotives.
“It’s not only the prices of cars that would benefit from this reduction in tariff,” he said. “The ripple effect is that there will also be higher demands for energy products like Premium Motor Spirit as well as reduction in cost of transportation for average citizens.”
While the policy signals a significant step in the automotive business, car dealers still raised alarm, arguing that other import duties like FOB, VAT, and surcharges may still affect the cost of importing vehicles, forcing prices to remain the same at the lower radar.
Ajibola Adedoyin, the president of the Association of Motor Dealers of Nigeria, explained that the reduction in the isolated tariff line would not drastically alter the final mathematics for a dealer bringing a car into the country.
“If the government also reduces other import duties, the effect will be more significant because of its larger share in the total cost structure,” he said.
Dr. Bello echoes the same concerns as Ajibola, adding that multiple tax rates stifle economic development. The expert advises the government to centralise the tax payment system into a specific single unit method to ease the burden on importers.
“When there are no taxes or very minimal taxes, it attracts foreign investment,” he said.
