Owing to the scarcity of foreign exchange and high clearing cost at the seaport, data from the National Bureau of Statistics (NBS) shows that importation of foreign used cars popularly known as “tokumbo” has dropped by 51.2 percent in the first half of 2022.
According to NBS, in the first half of 2022, Nigeria imported foreign used cars recorded a total worth of N169.1 billion which represents a heavy decline of 51.2 percent when compared to N346.2 billion recorded in the first half of 2022.
While the drop in volume and monetary worth has been noticeable since the beginning of this year, Investors King understands that the acute foreign exchange scarcity and the high costs of clearing cars at the ports are some of the most potent reasons for the drop.
A closer look at the NBC data shows that the drop which has led to an astronomical rise in the price of foreign used cars in Nigeria is the country’s lowest since 2018.
Similar factors also affect the importation of motorcycles and tricycles resulting in the surging prices of both.
Several observers and a number of industry players have lamented the high costs of clearing goods at the Nigerian port which has eroded their profit.
A car dealer simply identified as Enitan noted that cars that could be cleared for N600,000 are now being cleared for more than a million naira.
In addition, the introduction of Vehicle Identification Number (VIN) valuation by the Nigeria Customs Service in February 2022 has led to the surging increase of the tariff charged on imported cars both brand new and foreign used alike.
It would be recalled that VIN valuation had generated some controversy which led to its initial suspension.
VIN valuation when introduced was generation outrageous value of more than 200 percent on imported vehicles.
Although the Nigeria custom stated that it has rectified the error, vehicle importers nevertheless argued that the valuation is still faulty and has made many of them shy away from importing used vehicles which has led to the drop in volume.