? Importers take advantage of additional charge for price gouging

? Dealers warn of collapse in affordable car market as importers go for luxury vehicles

The newly-approved Nigeria Customs Service (NCS) four per cent free on board (FOB) valuation charge has stirred concern among importers, clearing agents and the business community, who express worry of the consequences of an increase in the cost of clearing for the citizens? survival.

Already, concerned stakeholders have warned that the cost of clearing imported vehicles and general cargo could spike by as much as 40 per cent.

Auto dealers have also expressed concern that this additional charge would drive vehicle prices beyond the reach of average Nigerians and suffocate demand for affordable used cars.

Already, prices have soared by as much as 350 per cent following the post-COVID-19 currency crisis that fed into general prices and triggered unusual inflationary pressure.

According to auto dealers, the most impacted segment is the lower- and middle-income market, dominated by Toyota Corolla, Honda Civic, Honda Accord and some Nissan models, where millions of Nigerian households play.

Car unaffordability could increase the misery level of families as decent public transportation modes are largely unavailable or unaffordable in many cities.

A report by Cowrywise titled ?The Economics of Owning a Car? revealed that owning a modest Nigerian-used car like a 2005 Toyota Corolla now costs an estimated N22.7 million over five years in Lagos. That includes purchase, fuel, maintenance, regulatory fees, repairs, and depreciation. Even after factoring in resale value, the total cost still stands at N18.9 million.

A used 2006 Toyota Corolla vehicle costs between N6 million and N9 million, depending on the grade. The same vehicle sold for less than N3 million three years ago. The same applies to everyday vehicles seen on Nigerian roads. Today, it will take at least 2.5 years to save towards buying a decade-old car worth N10 million from a monthly income of N1million, given that 30 per cent is committed to the goal monthly.

Dealers said that with profit margins of cheap vehicles thinning and import costs rising, many vehicle importers are shifting to luxury vehicles, which only wealthy Nigerians can afford, to a matter of business survival.

The situation has also affected Nigerian-used vehicles, as dealers said the prices are also skyrocketing. The National Bureau of Statistics (NBS) foreign trade data showed that the value of used vehicles imported in 2021 was N617.48 billion, while in 2022 it stood at N325.05 billion.

For 2023, the value stood at N1.47 trillion, while in 2024 it dropped to N1.26 trillion, highlighting a drop in demand.

The drop in the nominal value of imported vehicles reveals a little about the drop in imported vehicles. The real-term growth might have fallen by over 50 per cent, considering that the exchange value of the naira lost about 50 per cent from 2023 to 2024.

However, The Guardian learnt that some vehicle importers and dealers are taking advantage of the reintroduced levy to hike the prices of their vehicles.

Industry stakeholders also raised concerns about some importers attempting to beat the system through under-declaration and the importation of Fully Built Units (FBU) disguised as accidented or Completely Knocked Down (CKD) vehicles.

But this notion was dismissed by the National Public Relations Officer for the Association of Registered Freight Forwarders of Nigeria (AREFFN), Taiwo Fatomilola, who denied the viability of using CKDs to evade the full charges applied to FBUs.

According to the operator, the Customs? digital tracking systems and verification processes in place are too robust to be outmanoeuvred by manipulation, noting that once an importer declares the full 17-digit chassis number on the bill of lading, the exact manufacture year and full vehicle specifications will be exposed.

Fatomilola explained that both Customs and their IT partners can trace the bill of lading?s history and cross-reference it with the manufacturers? databases to uncover any discrepancies between declared and actual vehicle configurations.

?In the past, when doing declarations for six-digit chassis numbers, some importers could omit a number or two. But that window is closed now. The system is advanced. They?ll catch you using the trim level and VIN tracking,? he said.

The Customs digital system was updated on August 4, 2025, to include the controversial four per cent FOB charge, despite an earlier agreement that the existing seven per cent surcharge and one per cent Comprehensive Import Supervision Scheme (CISS) would first be removed. Surprisingly, the one per cent CISS has been removed while the seven per cent surcharge remains in the system.

The NCS introduced a four per cent levy on the FOB value of imports as part of the Nigeria Customs Service Act (NCSA) 2023, which replaces the existing seven per cent customs collection fee and one per cent Comprehensive Import Supervision Scheme (CISS) fee.

The FOB is calculated based on the value of imported goods, covering the cost of goods and transportation expenses incurred up to the port of loading.

Freight forwarders who have already processed vehicle importation jobs under the new regime reported duty spikes of up to 40 per cent.

?The increment is high. Almost 40 per cent has been added to the old duty we?ve been paying,? the Chief Executive Officer of Globjoy Investment Limited, Clinton Okoro, said.

The Comptroller-General of Customs (CGC), Bashir Adeniyi, had during townhall meeting with stakeholders, clarified that the implementation of the FOB levy was essential to fund the technology platform critical to modernising customs operations.

Adeniyi explained that the levy was backed by the Customs Act of 2023, which was passed by the National Assembly and signed into law by President Bola Tinubu earlier this year.

Adeniyi addressed concerns about double charges, saying: ?There was some misunderstanding among stakeholders, but the Act clearly states that all administrative and operational costs will now be covered by the new FOB levy.?

The Guardian sighted one of the clearing documents of a consignment on the B?Odogwu platform, with a total value of N4,141,854. The taxes imposed include the four per cent FOB, which was N165.674.1; the 20 per cent duty, which is 828,370.81. The 15 per cent National Automotive Council (NAC) levy was N621,278.11, while the 0.5 per cent ETL stood at N20,709.27 among other charges.

Stakeholders warned that the country?s ports could see a slowdown in activity, a spike in abandoned consignments and a further rise in consumer goods prices at a time high inflation has had its longest run in the country?s history.

Okoro, who is also the Public Relations Officer of the Tin Can Chapter of the African Association of Professional Freight Forwarders and Logistics of Nigeria (APFFLON), argued that the FOB-based charge is more burdensome than the old system, which calculated the seven per cent surcharge based on the cost, insurance and freight (CIF) value.

?Even if they had removed the other charges, the four per cent FOB would still be higher because it?s calculated differently ? and it significantly raises clearing costs,? he explained.

Giving further context, Okoro said vehicles purchased for $4,000 to $6,000 abroad now cost around N3 million or more to clear at the country?s ports.

He also explained that vehicles bought for as much as $10,000 to $20,000 face even greater clearing challenges, adding that the financial strain is discouraging importers from shipping in new stock.

?Sometimes, the clearing cost is even higher than the purchase price of the car. That?s why you see many cars littered at the ports, people just walk away from them,? he said.Okoro warned that the ripple effects will be felt most by Nigerian consumers, as importers will inevitably pass on the extra charges to end-users.

?Nobody will import and sell at a loss. The increased clearing cost will be added to the final selling price, which will worsen the already difficult economic situation for ordinary Nigerians,? he said. He noted that many importers borrow funds from banks to finance shipments, and with rising logistics costs, they are left with little choice but to adjust prices upward to stay afloat.

?Some individuals who ship in vehicles for personal use may abandon them at the ports if they can?t afford the new clearing costs. The Customs sees that as a good thing because they end up auctioning them, although that process, too, is far from transparent,? he lamented.

The Manager of Client Services at Inspired Cars, Iwayeye Olatunji, expressed deep frustration, noting that vehicle importers are now required to pay an additional fee to existing port charges and levies.

?This is a serious financial blow. The cumulative cost now amounts to about 30 to 40 per cent of the vehicle?s value. So, for a car worth N10 million, you?re looking at a clearing cost of about N3 million or more,? he said.

The impact, Olatunji warned, was already being felt in the marketplace, as importers reduce volumes and consumers scramble to make purchases before prices surge further.

?It does not make financial sense to bring in smaller cars anymore. Only people who can pay for high-end vehicles are still in the market. A Corolla meant to serve daily needs is now becoming an unaffordable luxury,? Olatunji said.

The Guardian learnt that port activities are on the decline, with the charges in clearing goods, businesses suffering and unable to repay loans secured from the banks.

The National Public Relations Officer for the Association of Registered Freight Forwarders of Nigeria (AREFFN), Taiwo Fatomilola, said the crippling effect of the reintroduced FOB levy and the continued retention of the seven per cent surcharge is suffocating the vehicle importation business and paralysing activities at major ports.

He described the situation at the Lagos Ports as a ?ghost town,? with both brand-new and used vehicles (Tokunbo) stuck in limbo, as importers and freight forwarders struggle with excessive charges for clearance.

?With the introduction of the FOB and the retention of the seven per cent surcharge, it?s killing the business seriously. Nothing is forthcoming. If you enter the port, it?s like a ghost town,? he lamented.

Fatomilola explained that ?If you were paying N8 million in duty before, you are now paying an additional N6 million as FOB charges, making it N14 million in total to clear your vehicle.?

Fatomilola said this FOB hike is an additional 40 per cent higher than the one per cent CISS and seven per cent surcharge combined. Fatomilalo accused vehicle importers of profiteering at the expense of ordinary Nigerians by hiking car prices.

?If not for the greediness of importers, the four per cent increase should not affect vehicle prices in the market. Their profit margin will only reduce, but they?re hiking prices unnecessarily,? he said.

He revealed that freight charges from the United States to Nigeria average $1,200 to $1,300 per vehicle, and warned that importers exploiting the FOB hike to increase car prices risk pricing themselves out of the market.

?They were making as much as N15 million to N20 million profit on a single vehicle. If they now hike it by another N1 million to N2 million because of the new charge, who will buy it?? he asked.

The Secretary, Customs Consultative Committee (CCC), Eugene Nweke, said the reintroduction of the FOB levy is expected to make a difference in the cost of importing goods.

?Without a doubt, the four per cent FOB levy is a cost component that adds to the cost of clearance from customs, and it can be considered a burden to the shipper. While the NCS may argue that it replaces existing fees and aims to modernise customs operations, the reality is that it still increases the financial burden on importers.

?However, the shippers take solace to the fact that the port is considered a value adding supply chain, and without mincing word, four per cent FOB levy stands as a value addition to the port supply chain, having removed the one per cent CISS, and with a focus on the giant strides in modernisation,? he stated.

Speaking of the Impact on importers, Nweke said, though, the FOB levy can lead to increased costs for importers, which may be passed on to consumers, it could potentially affect the competitiveness of Nigerian businesses and the overall economy.

?The payment of the four per cent FOB levy is typically made during the customs clearance process. It is calculated and paid together with customs duty payment, having its own debit notes schedule/ protocol,? Nweke explained. (Th Guardian)

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