On April 1, 2026, Nigeria’s Finance Minister Wale Edun signed off on the 2026 Fiscal Policy Measures (FPM).
The policy cuts the tariff on fully built passenger vehicles, including sedans, four-wheel drives, and station wagons, from 70 per cent to 40 per cent.
This announcement triggered immediate excitement on social media, and many Nigerians are already projecting that car prices will drop significantly. But will they?
In this explainer, DUBAWA breaks down the policy, runs the numbers, and compares the claims to the reality on the ground.
What the government said
It is important to clarify that the government reduced the tariff, not the import duty on cars. While import duty and tariff are often used interchangeably, they are not the same. Import duty is the total amount paid on imported goods, while in this context, tariff is just one of the fees.
The new reduction replaces the higher rates introduced under the 2015 fiscal regime. The federal government said it is designed to “promote and stimulate growth in critical sectors of the economy.”
A 90-day grace period was granted for importers who had already opened their Form “M” before April 1. This means vehicles already in transit or at the ports may still be cleared under the old 70 per cent rate.
Therefore, any price changes at the dealership level may take months to fully materialise.
What does it cost to import a car?
This may be where the excitement around the policy runs into a harder truth.
For an average consumer who may not know, the tariff is just one of several charges added to a car’s cost before it reaches a showroom.
Others, like insurance, the National Automotive Council (NAC) levy, Value Added Tax (VAT), surcharges, and Free On Board (FOB) levies, all pile up. By the time shipping, terminal handling charges, and clearing agent fees are added, the cost can get quite high.
Will car prices actually drop?
On paper, the car import tariff was 70 per cent. In practice, however, most car dealers have not been paying the full amount due to various lobbying, policy shifts and suspensions over the last decade. The ones who spoke to DUBAWA said they have been paying between 30 and 35 per cent instead.
In fact, as of early 2026, the Nigeria Customs Service utilised an automated system that set the actual duty for most cars at 20 per cent, and often accompanied by a 15 per cent levy. This resulted in a total of 35 per cent, which is lower than the 70 per cent rate the government claimed to be cutting from.
While the implementation of this “new 40 per cent” would look like a decrease on paper, in reality, it could amount to an increase for dealers who have not been paying the official 70 per cent before now.
With that established, whether this change will reflect in your purse as a consumer also depends on other factors.
First, the exchange rate volatility. The reality is that the Naira has been highly volatile since 2023. Therefore, if the Naira should weaken between now and when a dealer clears their next shipment, the exchange rate loss could easily cancel out the tariff reduction.
Apart from that, a dealer may decide not to pass on the tariff savings to buyers. Without competitive pressure or regulatory compulsion, they may see it as additional profit and pocket it.
Furthermore, the Association of Motor Dealers of Nigeria has also stated that the new tariff reduction will not ease the burden on consumers.
In a recent interview with The Sun, the association’s president, Ajibola Adedoyin, said that though the policy will reduce prices, the reduction will not be significant.
“For instance, if a vehicle costs about N5 million, and the tariff component is around N400,000, while duty is higher, the reduction in tariff may only result in a difference of about N150,000. That is not substantial enough to significantly affect the final price for buyers… Yes, if the government reduces import duty, the effect will be more significant because of its larger share in the total cost structure,” he told the news platform.
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