As inflation creeps into every sector of Nigeria’s economy, ONYEKORMAKA ASABOR presents the plight of automobile dealers amid high import cost
Sequel to rising input cost in the importation of automobiles in Nigeria, speculations on the increase in the prices of vehicles is gathering momentum, as used automobile importers and other dealers lament spiralling tariff and devaluation of the naira.
The Federal Government had announced that beginning from June 1, 2021, terminals would be paying 50 per cent handling charges. Against the backdrop of the new rate, low budget Nigerians would be unable to purchase cars.
Two Roll On Roll Off terminals at the Tin Can Island Port – Ports and Terminal Multipurpose Limited and Five Star Logistics Terminal – last year, announced an increase in their terminal handling charges by 50 per cent.
According to a circular released by both terminal operators, the increment was expected to take effect as scheduled. However, the terminals blamed the increment on inflation and huge operational cost due to the nature of Nigerian ports, among others.
Inflation
In its circular, PTML, one of the biggest vehicle terminals in Nigeria, stated, “PTML would like to bring to the attention of its esteemed customers that the dramatic surge in inflation in 2020 and 2021, as well as the ever-increasing operational expenses incurred because of the particularly challenging port operational environment, which has had a huge impact on the company’s direct cost. PTML tariff has not been adjusted for a number of years now, and it has become impossible for the terminal to provide the same level of service as current prices.”
Nigeria reportedly imported N1.28tn worth of used vehicles, popularly known as Tokunbo, and motorcycles from Q3 2019 to Q2 2020, an increase of 42 per cent, compared to N899bn recorded from Q3 2018 to Q2 2019.
Under Nigerian law, 7.5 per cent Value Added Tax is charged on taxable goods and services.
Stakeholders kick
Meanwhile, importers, car dealers and freight forwarders have kicked against the 50 per cent increase in the terminal handling charges, saying the development would intensify inflation.
They told journalists that the development would further trigger increases in the prices of imported automobiles.
Rising charges on terminal handling, others
Breaking down the PTML charges, Public Relations Officer of the Association of Nigerian Licensed Customs Agents at PTML, Ayokunle Sulaiman, lamented that terminal handling, delivery, documentation and demurrage charges had all been increased.
He said, “There has been a 50 per cent increase in the charges, including terminal documentation. For vehicles, terminal documentation, which was N10,000, has been increased to N15,000. Terminal handling and terminal delivery charges are the core aspects of the job, all other ones like demurrage are avoidable.”
On Five Star Logistics, Suleiman said, “For SUVs, we were paying N21,000 as terminal handling charges; it has been increased to N33,000. For the same SUV, we were paying N3,600 as terminal delivery charges, but it has been reviewed upwards to N7,500.”
Dealers threaten to close shop
Also, as controversy continues to surround the introduction of 15 per cent National Automobile Commission levy on imported used vehicles by the Nigeria Customs Service, car dealers recently threatened to close shops.
The threat was sequel to the recently introduced 15 per cent NAC levy made known to importers by NCS on used vehicles, a decision which didn’t go down well with clearing agents in the country’s maritime sector.
The agents argued that the NAC levy was mostly meant for new vehicles, questioning the rationale behind the introduction of the duty on used vehicles.
Responding, the PRO of NCS, Timi Bomodi, said the move was in compliance with the Economic Community of West Africa Common External Tariff.
Need to reduce tariffs
Sequel to the development, which has been considered as retrogressive, some Nigerians and the Association of Motor Dealers of Nigeria urged the Federal Government to implement policies that would make motor vehicles affordable to many potential and existing consumers.
National President of AMDON, Ajibola Adedoyin, expressed the same view, noting that cars, a variant of motor vehicles, carry less than 10 persons, making up the bulk of the vehicles used for intra-city and inter-city transportation in the country.
If this category of vehicles is made unaffordable, it will negatively impact the economy, he added.
