The Changing Nigeria Auto Market

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The Nigerian auto market should be undergoing some big changes this year and beyond, as the government in Nigeria is trying to initiate an overhaul.

As a country that boasts the largest economy in Africa, it also has the largest population. Recently, Nigeria surpassed South Africa in becoming the 21st biggest economy, with it being valued at over $500 billion. The problem that their government is currently dealing with though is in trying to get automakers to start manufacturing automobiles in Nigeria itself, rather than relying on imports as they have been doing for the past few decades. The steps that they're taking to do so are quite simple, as it's a two-step process:

Stop the Importing of Vehicles

This is the first step of their process and is an obvious one. Starting in 2014, the Nigerian government has been steadily increasing the import tax rates on car imports, with the goal being to eventually increase these import tax rates by 70%. The first increase was introduced in February of 2014, with an increase of 34%. As a direct result, a number of car imports from the United States to Nigeria decreased by a year-on-year rate of close to 50%.

The next 35% increase was supposed to be implemented on January 1st, 2015, but the Nigerian government recently decided to push that back to April of 2015, with the reason being that there simply has not been enough movement on the part of automakers to build the infrastructure needed within the country to produce vehicles at a significant production volume.

Because of these tax import increases and the one that is coming in April of this year, many exporters that shipped cars to Nigeria, specifically to the Port of Lagos, are now deciding against it. Instead, they are getting around this issue by shipping cars to the Port in Benin instead, which is a country that borders Nigeria.

Benin now has a new influx of cars being shipped there, with many citizens from Nigeria simply choosing to pick up the vehicles there and to then drive them back to Nigeria. Of course, this is technically an illegal practice, but Nigerians are finding ways to smuggle them across their border. The Nigerian government is aware of this and is trying to put a stop to it.

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Make Automakers Manufacture Vehicles in Nigeria

Of course, the Nigerian government has to try and make sure that the automakers start producing vehicles in their own country. One way that they're planning on doing so is through passing a law in April of this year, in which any automaker that has sales of over 10,000 units during the year has to start manufacturing the vehicles in the country. This has already been a success even before it has officially been passed, with companies such as Honda and Volkswagen currently making plans to open up factories.

Adding to this is that oil prices, which the Nigerian government relies on heavily as their main export, have seen a sharp decrease in their prices. In order to make sure that they have revenue coming in, these new import taxes are more important than ever for them, and if the price of oil doesn't rebound, you can expect them to make the import taxes even higher.

Nigeria's import market is one to watch for this year!

Joe Webster
Written By:Joe Webster
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Joe Webster began his journey in the auto transport field by attending the University of Southern California (USC), where he graduated with a Bachelor of Business Marketing. 

After college, he started his career in the auto transport industry from the bottom up and has done virtually every job there is to do at A-1 Auto Transport, including but not limited to: Truck Driver, Dispatch, Sales, PR, Bookkeeping, Transport Planner, Transport Manager, International Transport Manager, Brokering, Customer Service, and Marketing. Working with his mentor Tony Taylor, Joe Webster has learned the ins and outs of this industry which is largely misunderstood. 

With over 30 years experience in the industry, we've been helping people ship their vehicles, motorcycles, RV's, heavy equipment, household goods and more across the country or overseas without a hitch. Ask us anything.

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