Nigeria’s car market is on the brink of another price surge as a new U.S. import tariff threatens to push up the cost of vehicles and spare parts.
The U.S. government will impose a 25 percent tariff on automobile imports starting April 2, a move that is expected to disrupt global supply chains and drive up prices worldwide.
For Nigeria, where a large percentage of cars and spare parts are imported, this policy shift means higher costs for dealers and consumers alike.
Importers will likely pass the increased costs onto consumers, making cars even less affordable at a time when high inflation and a weak naira have already strained household budgets.
With over 1.1 million cars sold annually, most of them imported, the impact on Nigeria’s auto market could be severe.
Nigeria spent $2.3 billion on vehicle imports in 2021, relying heavily on foreign manufacturers for both new and used cars, as well as spare parts, which largely come from China, Europe, and the U.S.
While the tariff is intended to protect American automakers, its consequences will extend far beyond the U.S., tightening global supply chains and raising costs for import-dependent markets like Nigeria.
What it means for car buyers and mechanics
Bismarck Rewane, economist and CEO of Financial Derivatives Company (FDC), described the tariff as “an extremely destructive strategy” in an interview with Arise News.
Citing classical economist David Ricardo, he noted that “by means of trade, every nation enjoys the advantage of every climate, soil, and invention of foreign nations.”
Rewane argued that restricting trade through tariffs ultimately limits economic benefits and raises costs for consumers.
This concern aligns with Nobel laureate Paul Krugman’s warning that “trade protectionism is a seductive but dangerous policy, it makes you believe the country is winning, even when the overall economy is losing.”
Also, the move has already sparked international concern. Luiz Inácio Lula da Silva, Brazil’s President warned that his country “cannot stand still” in response to the levies, signaling possible retaliatory measures that could further strain global trade.
Even Elon Musk, Tesla CEO, an ally of President Donald Trump, acknowledged the financial burden, stating that the impact on Tesla’s costs is “not trivial” due to the higher price of imported car parts.
His remarks highlight broader concerns about the policy’s unintended consequences, including increased vehicle costs worldwide.
Local auto industry struggles to cope
For Nigerian consumers, the immediate effect is clear: higher prices on both new and used vehicles.
Given that imported cars, particularly second-hand models dominate the market, a disruption in supply will exacerbate affordability issues.
Many buyers already turn to the grey market, where foreign-used vehicles (popularly known as ‘tokunbo’) provide a cheaper alternative to new cars.
However, with sourcing costs rising, even these options may become more expensive. Local dealers will be forced to pass these additional costs onto consumers, weakening purchasing power and reducing demand.
Beyond showroom prices, maintenance and repair costs are also expected to rise. Nigeria’s automotive repair sector depends heavily on imported spare parts, many of which are sourced from tariff-affected regions.
A rise in procurement costs could force mechanics and fleet operators to adjust their pricing, making vehicle upkeep significantly more expensive.
For commercial transport operators, this could translate to higher fares, further straining household budgets at a time when living costs are already elevated.
Insurance premiums may also increase, as insurers factor in the rising cost of vehicle repairs and replacements.
If higher costs squeeze global supply chains, local dealers may struggle to source affordable vehicles, pushing car ownership further out of reach for many Nigerians.
This underscores a broader vulnerability: Nigeria’s dependence on imports for its automotive industry. The government’s National Automotive Industry Development Plan (NAIDP) was designed to spur local manufacturing and reduce reliance on foreign vehicles and components, yet progress has been slow.
