Nigeria’s automotive market may be on the verge of a major shake-up following the Federal Government’s dramatic reduction of vehicle import levies, but auto dealers are warning that a newly introduced Green Tax could determine whether motorists celebrate lower prices or brace for fresh costs.
The new policy, which has officially taken effect under the 2026 Fiscal Policy Measures, slashes the import levy on brand-new vehicles by half, from 20 per cent to 10 per cent, while the levy on used vehicles has been drastically reduced from 15 per cent to just five per cent.
The move has sparked optimism across the automotive industry, with many hoping it could finally bring relief to millions of Nigerians struggling with soaring vehicle prices driven by high import duties and foreign exchange pressures.
However, excitement over the tax cut has been tempered by growing concerns over the Federal Government’s newly introduced Green Tax Surcharge on certain imported vehicles.
Industry operators say the lack of clarity surrounding the new environmental charge has created uncertainty over the actual benefits of the policy.
“We simply don’t know yet whether vehicle prices will come down significantly,” said Executive Officer of Mitchel Automobile Limited, Prince Ajibola.
According to him, while the reduction in import levies represents one of the biggest concessions granted to the automotive sector in recent years, the impact could be neutralised if the Green Tax proves substantial.
“We don’t know what the surcharge is going to be. If government reduces the levy on vehicles and then introduces another surcharge, we need to know how much that surcharge is before we can determine whether there will be any considerable change,” he said.
The reduction in the levy on used vehicles from 15 per cent to five per cent has particularly attracted attention within the industry, with operators describing it as a potentially game-changing intervention.
But Ajibola warned that the gains could disappear if the Green Tax effectively replaces the revenue government is giving up through lower import levies.
“If the surcharge is far less than what has been reduced, then it’s definitely a plus for the industry and consumers. But if it is the same or even higher, then nothing much has changed,” he explained.
For years, import duties have remained one of the biggest factors driving up vehicle prices in Nigeria, alongside persistent foreign exchange volatility and logistics costs.
Industry stakeholders believe the latest fiscal adjustment could stimulate vehicle imports, boost commercial transportation and improve access to mobility, especially if the Green Tax remains modest.
Ajibola expressed cautious optimism over the policy, noting that commercial vehicles could emerge as the biggest beneficiaries of the government’s latest intervention.
“The development is a very good one. There’s no doubt about that. But to know exactly how it will affect prices, we need to know what the Green Tax is. If it is very little, then the reduction in levies will still be significant and consumers will feel the impact,” he said.
As importers, dealers and consumers await details of the Green Tax regime, one question now dominates Nigeria’s automotive market: Has the Federal Government truly made vehicles cheaper, or has it simply replaced one tax with another?
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