Prices of imported cars to rise by 60%

 Finance Minister, Dr. Ngozi Okonjo Iweala

The Federal Government has released the details of new duties and levies payable on imported new and used vehicles as well as imported new tyres from next year, raising the tariff from 20 per cent to 70 per cent.

Dealers of imported vehicles estimated that the new rate would translate into an increase of 60 per cent on imported cars.

The Federal Executive Council had last month approved a new national automotive policy aimed at encouraging local production and assembling of new vehicles with an imposition of a high import tariff on fully built vehicles. But the new rate was not given then.

A two-page document dated November 14, 2013 and signed by the Minister of Finance, Dr. Ngozi Okonjo-Iweala, gave the new import tariff on cars as 70 per cent (of the cost of each vehicle).

It stated that a fully built car would attract a duty of 35 per cent and a levy of another 35 per cent of the cost of the vehicle.

Hitherto, importers/dealers parted with 20 per cent and two per cent as duty and levy, respectively on new cars. Ten per cent flat rate was also imposed on commercial vehicles.

Although the new tariff on cars shows an increase of 48 per cent over the old rate, dealers have estimated that the showroom price of an imported car will rise by 60 per cent when other variables (costs) are added.

In other words, prices of imported cars currently being sold between N3m and N5m will shoot up to N4.8m and N8m; while tokunbo vehicles selling for N800,000 will rise to N1.28m.

Those who spoke with our correspondent on the issue on Sunday also warned that there might not be enough vehicles to meet the demand of the country next year.

A sales manager with one of the major dealers said, “Many of us are skeptical about ordering for new vehicles because we don’t know if people would be ready to pay the about 60 per cent increase on the cars when the import duty and levy are added to the original cost of purchase.

“Even the supplies by local plants will obviously be grossly inadequate to meet the demand.”

The document, with reference number BD/FP/DO/09/189, also stated that fully built commercial vehicles would attract 35 per cent duty but no levy imposed.

Specifically, it stated, “Local assembly plants shall import completely knocked down (vehicles) at zero per cent duty; and semi-knocked down (vehicles) at five per cent duty.

“Local assembly plants shall import fully built unit cars at 35 per cent duty and 20 per cent for commercial vehicles without levy, respectively in numbers equal to twice their CKD/SKD kits.

Imported tyres would also cost more as from next year as 20 per cent duty and five per cent value added tax have been placed on tyres of cars, buses and lorries.

“Local tyre manufacturing plants are to import tyres at five per cent duty in numbers equal to twice their production for two years from the date of commencement of production,” it stated.

Similar high tariff will also be charged on used vehicles, according to the document. It added that the Nigeria Customs Service “shall use the value of a new vehicle depreciated by 10 per cent per annum, implying 10 years period of cars and by seven per cent per annum implying 15 year period for commercial vehicles. In either case, depreciation should never be below 30 per cent of the value of the new vehicle equivalent.”