Federal Government has not increased Duty on used cars to 70% .

Minister of Industry, Trade and Investment, Mr. Olusegun Aganga

The Minister of Industry, Trade and Investment, Mr. Olusegun Aganga, on Wednesday said there was no truth in media reports that duty on used cars had been increased to 70 per cent with effect from July 1 based on the new National Automotive Policy.

He said contrary to the report, the duty on used cars remained 35 per cent.

Aganga said this in an interview with State House correspondents at the end of the weekly Federal Executive Council meeting, where he said the council members were appropriately briefed in order to correct the misrepresentation.

The minister explained that all those assembling cars in the country would be allowed to import at 35 per cent duty to bridge the gap that might arise between demand and supply.

He, however, said the 70 per cent duty would be applicable to those who were not ready to assemble cars locally but preferred to engage in trading by bringing the vehicles from abroad.

The decision, he explained, was aimed at protecting those assembling cars locally and make importation unprofitable and unattractive.

Aganga said, “The article (media report) had claimed that the duty on used cars is now 70 per cent from yesterday (July 1); that is incorrect. It is 35 per cent. It also claimed that all used cars now coming into the country would pay duty of 70 per cent; that again, is incorrect.

“For all those in the auto policy programme, all those assembling cars in the programme; the policy is that they will be able to import cars to meet the gap when you look at production and the demand in the country; they would be able to import those cars at 35 per cent; so, it is not 70 per cent.

“It is only for those who are putting strain on our foreign reserves, those who have no intention of creating jobs, those who want to continue to remain traders that the 70 per cent applies to and this is to discourage trading.

“It is to encourage local assembly and job creation, and stop unnecessary pressure on our foreign reserves. So, it is an economic issue and it is very deliberate.”

The minister added, “Why will you import cars at 70 per cent while others are importing at 35 per cent? So, we do not expect to see anyone importing cars at 70 per cent. It was just a measure to encourage people to go within the policy group.”

“When you look at the blended rate of those in the auto programme for the CKDs, SKD 1 and SKD 2 they bring to the country, they only pay duty of zero per cent, five per cent and 10 per cent, respectively.

“So when you look at the blended rate of what they produce locally and what they import, it is just above 20 per cent. That is the policy and that is why all the manufacturers and assemblers of cars, including some of the major distributors of cars and importers of cars have given an undertaking they will not increase their prices at all. Anyone who wants to buy cars from anyone of them, they will find out that none of them plans to or has increased prices at all.”

Aganga said the Federal Government would continue to monitor the prices of cars every week because the new policy should not lead to any price increase if the operators were to be fair to the consumers.