A newly introduced 4% Fee on Board (FOB) valuation charge by the Nigeria Customs Service (NCS) has ignited controversy and concern across the automobile importation sector, threatening the collapse of the affordable car market and deepening the economic strain on average Nigerians.
Clearing agents, auto dealers, and business stakeholders have raised alarms over the policy, warning that the cumulative effect of the levy could drive clearing costs up by as much as 40%. This, they say, is already pushing car prices beyond the reach of middle- and low-income earners, with many importers now shifting focus to high-end luxury vehicles that cater only to Nigeria’s elite.
Soaring Prices, Shrinking Options for Nigerians
Auto dealers report that the most impacted segment is the market for used and economy-class vehicles like Toyota Corolla, Honda Civic, and Nissan models — staples for millions of Nigerian families. A modest Nigerian-used 2005 Toyota Corolla now costs up to ₦22.7 million to own over five years in Lagos, according to a Cowrywise report. Just three years ago, the same model sold for under ₦3 million.
Today, that same vehicle fetches between ₦6 million and ₦9 million, and it could take more than two years of disciplined saving for a middle-class Nigerian earning ₦1 million monthly to afford a used car worth ₦10 million.
“The affordability crisis is deepening,” said Clinton Okoro, CEO of Globjoy Investment Ltd and spokesperson for APFFLON at Tin Can Island Port. “Importers can no longer sustain low-margin vehicles; they are turning to luxury cars as a survival strategy.”
Dealers Accused of Profiteering
In a twist, some stakeholders accuse vehicle importers of exploiting the new FOB levy to engage in price gouging. According to Taiwo Fatomilola of the Association of Registered Freight Forwarders of Nigeria (AREFFN), some dealers are inflating prices well beyond the actual additional clearing cost.
“Greed is part of the problem. Profit margins may reduce, but prices should not have jumped this drastically. Importers are using this levy as an excuse to squeeze more from buyers,” Fatomilola said.
He noted that average freight charges from the U.S. to Nigeria remain around $1,200–$1,300, and cautioned that pricing vehicles out of reach could collapse the market altogether.
Customs Defends Levy as a Modernization Tool
The NCS Comptroller-General, Bashir Adeniyi, defended the levy, citing its legal backing under the Nigeria Customs Service Act (NCSA) 2023. According to Adeniyi, the FOB levy replaces the previous 7% customs surcharge and one per cent Comprehensive Import Supervision Scheme (CISS), though stakeholders complain that only the CISS has been removed so far.
“The 4% FOB levy is necessary for funding digital platforms critical to customs modernization,” Adeniyi said at a recent town hall meeting. “This is not a double charge, but a restructuring of how operations are financed.”
Nonetheless, stakeholders argue that the FOB-based model is more burdensome than the old CIF-based seven per cent surcharge, and that the actual removal of redundant charges has not fully materialized.
Collapse of the Affordable Car Market?
The fallout is already evident at major ports, with clearing houses turning into “ghost towns” due to sluggish activity. Freight forwarders say many vehicles are now being abandoned at ports due to unaffordable clearing costs.
“Some importers just walk away from their cars because clearing now costs more than the car itself,” Okoro revealed.
Further analysis showed that used vehicle imports dropped from ₦1.47 trillion in 2023 to ₦1.26 trillion in 2024 — despite a weak naira that suggests an even deeper decline in actual import volumes.
Experts Warn of Broader Economic Impact
Eugene Nweke, Secretary of the Customs Consultative Committee (CCC), acknowledged the burden placed on importers but urged stakeholders to view the levy as part of a broader modernization initiative. He emphasized the importance of transparency, efficiency, and data integrity enabled by digital customs systems.
Still, concerns linger. “The increased cost of vehicle ownership will affect mobility, productivity, and even inflation,” said Iwayeye Olatunji, Client Services Manager at Inspired Cars. “We’re now seeing a market where even a used Corolla is a luxury item. That’s not sustainable.”
As Nigeria grapples with inflation and currency instability, the widening gap between vehicle prices and average incomes raises broader questions about transportation access, economic resilience, and policy coherence in a struggling import-dependent economy.
