The federal government has deferred the 35 per cent levy on used cars imported into the country till April 30 this year.
The levy, which was earlier billed to take effect from January 1, 2015 is expected to significantly alter the price structure of used cars in the country.
Vehicle importers and dealers were said to be already readying for immediate jack of car prices as the new levy kicked in.
The Director-General and Chief Executive Officer, National Automotive Council (NAC), Aminu Jalal, announced the shift on Wednesday.
NAC boss said in a statement , “We saw some publications today (Wednesday) saying that used cars will cost more from January 1, 2015 as the 35 per cent levy will be charged. This levy would be further deferred to 30 April 2015.”
According to Jalal, the federal government intends to balance vehicle supply and affordability with the production by the assembly plants.
He said, “The government earlier deferred the imposition of the levy on used cars to December 31, 2014 to enable assembly plants ramp up enough production to satisfy demand.”
The director-general said the government had asked the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okojo-Iwaela, to extend the levy deferment on used cars to April 30, 2015.
He explained that the automotive policy has five elements, one of which is market development, adding that under market development, tariffs are increased on Fully Built Unit (FBU) vehicle imports.
According to him, these tariffs are to be reduced gradually over the years, as the vehicle assembly and local content operations gain momentum.
The Nigerian market, he said has approximately 400,000 vehicles annually, with about 300,000 imported as used, which was the reason “the government has to balance vehicle supply and affordability with the production by the assembly plants.”
He said measures in the policy to ensure vehicle supply and affordability are that completely knock down (CKD) and semi knock down (SKD) vehicle tariffs will be 0 per cent, 5 per cent and 10 per cent, respectively; assembly plants to assembly affordable vehicles; Assembly plants will import two FBU at concessionary duty for every one CKD/SKD they assemble in 2014/2015 and that it will be one to one in 2016/2017.
He said new investors would also be able import FBU at concessionary duty in numbers to fill the gap between the supply by the assembly plants and demand.
Another component is the establishment of affordable vehicle financing scheme to enable Nigerians purchase new vehicles.
He said VON is assembling Hyundai and Nissan cars; PAN is assembling Peugeot cars; IVM started assembling cars; and Dana Motors is assembling Kia cars.
He stated: “VW, Honda and Renault, amongst others, are expected to start assembly operations next year. VON, IVM and Kia also have cars costing N1.5m-N2.0m. So the industry can produce the vehicles we need in 2015.”
Jalal explained that the arrangements for the establishment of the affordable vehicle finance scheme suffered delay of about four months due to the Ebola Viral Disease.
He explained: “The staff of the collaborating bank, Wesbank of South Africa, delayed their planned trip to Nigerian to set up operations from September 2014 to January 2015. Hence the new date for the start of operations of the financing scheme is April 2014.”
