UPDATE : Nigerians will now pay more on Tokunbo cars starting April, as FG shifts tariff increase

 The Federal Government may have bowed to pressure on the implementation of the 70 per cent tariff on imported used vehicles by postponing its enforcement to April 30, 2015.

This is the third time in six months that the tariff implementation date will be shifted. It was first moved from July 1, 2014 when the government decided to implement the policy in two phases of 35 per cent apiece to January 1, 2015.

The government said then that the arrangement was to enable local vehicle assembly plants to ramp up production in order to meet the nation’s demand for brand new vehicles.

The cost of clearing imported second-hand vehicles would rise substantially from today (January 1, 2015) as the second phase of the 70 per cent tariff was meant to begin. By implication, Nigerians would have to pay more for such vehicles.

But the Federal Government, in a statement issued on Wednesday by the National Automotive Council, an agency of the Federal Ministry of Industry, Trade and Investment, said it had deferred the implementation of the new tariff to April 30, 2015.

The Director-General, NAC, Mr. Aminu Jalal, said in the statement that the postponement was due to the delay in the establishment of a vehicle finance scheme.

He said, “The arrangements for the establishment of the affordable vehicle finance scheme suffered a delay of about four months due to the Ebola Virus Disease.

“The staff of the collaborating bank, Wesbank of South Africa, delayed their planned trip to Nigeria to set up operations from September 2014 to January 2015. Hence, the new date for the start of operations of the financing scheme is April 2014. Accordingly, the Minister of Finance has been asked to extend the levy deferment on used cars to April 30, 2015.”

The Federal Government had imposed the 70 per cent of the cost of all fully built vehicles (both old and new) as tariff being part of an automotive policy introduced in September 2013 to discourage the importation of vehicles.

It also announced a zero per cent tariff on Completely Knocked Down units (vehicles) and five per cent to 10 per cent on Semi Knocked Down units to encourage the establishment of local vehicle assembly plants.

Jalal said, “The automotive policy has five elements, one of which is market development. Under market development, tariffs are increased on FBU vehicle imports. These tariffs are to be reduced gradually over the years, as the vehicle assembly and local content operations gain momentum.”

According to him, the nation’s vehicle market is about 400,000 units annually, with about 300,000 being imported as second-hand.

He explained that the government had introduced measures to balance the vehicle supply and make them affordable, with the production by the local assembly plants.

“The assembly plants will import two FBU at concessionary duty for every one CKD/SKD they assemble in 2014/15. It will be one to one in 2016/17,” Jalal said.

The NAC DG also said new investors would be able to import fully built vehicles at concessionary duty to fill the gap between the supply by the assembly plants and demand.

“As you know, Volkswagen of Nigeria is assembling Hyundai and Nissan cars; PAN is assembling Peugeot cars; IVM has started assembling cars and Dana Motors is assembling Kia cars. Volkswagen, Honda and Renault, among others, are expected to start assembly operations next year,” he added.