Nigeria's expenditure on imported used vehicles, commonly referred to as tokumbo, experienced a significant decline of 83 percent year-on-year, dropping to N138.62 billion in the first half of 2024 from N819.15 billion in the same period of 2023. 

A quarter-on-quarter analysis from the National Bureau of Statistics (NBS) regarding the 'Commodity Price Indices' and Terms of Trade (ToT) for the review period revealed that no used vehicles were imported in the first quarter of 2024, in stark contrast to the N69.23 billion worth of used vehicles imported in the first quarter of 2023. 

In the second quarter of 2024, the value of imported used vehicles reached N138.62 billion, reflecting an 81.5 percent decrease year-on-year from N749.92 billion in the second quarter of 2023. 

The NBS indicated that the majority of these used vehicles were sourced from the United States, noting that total imports from the U.S. in the second quarter of 2024 amounted to N971.84 billion.

It is important to remember that last year, the federal government implemented a new tax structure for imported vehicles. 

This tax regime mandates an additional Import Adjustment Tax (IAT) levy of two percent on vehicles with engine capacities between 2.0 and 3.9 liters, while those with engines of 4.0 liters and above are subject to a four percent IAT. This new levy is in addition to the existing 35 percent import duty and a 35 percent levy imposed on vehicle importers.

Exemptions from the IAT levy apply to vehicles with engine capacities below 2,000cc, mass transit buses, electric vehicles, and locally manufactured vehicles. Additionally, the government has updated the import prohibition list to include used motor vehicles that are over 12 years old from their year of manufacture. 

However, in March of this year, the Nigeria Customs Service (NCS) announced a suspension of the 25 percent import duty penalty for vehicles that were improperly imported.