Lack of Regulation Drives Nigeria’s Vehicle Parts Imports to $5 Billion

Nigeria’s automotive sector has seen a increase in vehicle parts imports, reaching an estimated $5 billion annually. This growth highlights the increasing demand for spare parts driven by the country's expanding population, aging vehicle fleet, and reliance on imported vehicles. However, the absence of stringent legislation governing the automotive industry has been a significant factor for the increase in demand.

Jayeola Ogamode, The Managing Director of Sceptre Consults, highlighted that Nigeria alone had spent $5 billion between 2019 and 2024 on vehicle spare parts and machines, indicating the funds could be better spent reviving and aiding the local auto industry. He noted that the Nigeria was the biggest market for used vehicles in sub-Sahara Africa, further supporting that the country’s roads constitutes over 95 per cent of aged used vehicles.

The managing director noted that the absence of legislation supporting development policies, the misalignment between procurement and industrial policies, and the uncontrolled importation of used vehicles have significantly hindered the growth of the local automobile sector.

In 2024, data from the National Bureau of Statistics (NBS) showed a significant decline in Nigeria’s used vehicle import bill, dropping by 83% to ₦138.62 billion in the first half of the year, compared to ₦819.15 billion in the same period in 2023. Consequently, Nigerians are increasingly choosing to repair and refurbish existing vehicles rather than importing used ones. This shift has led to a growing demand for spare parts and accessories across the country.

Last year, the Federal Government implemented a new tax policy targeting imported vehicles and other items.

Under new tax regime, imported vehicles with engine capabilities ranging from 2,000cc (2 litres) to 4,000cc (4 litres) are subject to Import Adjustment Tax (IAT) levy of between 2% - 4% of the vehicles value.

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