Stakeholders in Nigeria’s automotive industry have offered varied assessments of the likely impact of the Nigerian tax reform on the auto industry.

They, however, said the tax reforms were insufficient to deliver meaningful sector-wide growth without complementary policies.

They said there was a need for the government to introduce new incentives for electric vehicles (EVs), while creating opportunities for local manufacturers.

Speaking on the reforms, Deputy Managing Director of RT Briscoe, Femi Eguaikhide, outlined key provisions and their potential effects on the industry.

According to him, the exemption of EVs and EV parts from value-added tax (VAT) could help to accelerate the adoption of cleaner mobility solutions.

He also noted that the introduction of a 15 per cent import duty on petrol – and diesel-powered vehicles is intended to reduce the country’s dependence on imported vehicles.

However, Eguaikhide, who doubles as the Chairman of the Lagos Chamber of Commerce and Industry (LCCI) Auto and Allied Sector Group, cautioned that the planned introduction of five per cent fuel surcharge on fossil fuels may increase fuel prices over time, with knock-on effects on vehicle operating costs and consumer demand.

He added that while the new tax laws include incentives for investment in priority sectors, potentially benefiting automobile manufacturers, the overall impact on the industry would depend on government consistency, market trends and how industry players respond.

“Some believe these laws will ease the burden on operators and help revitalise the sector, while others fear they may widen inequality and ultimately raise costs for consumers,” he said.

Offering a broader policy perspective, a mobility expert and Managing Partner at Transtech Industrial Consulting, Luqman Mamudu, said the reforms signalled a shift from blanket pioneer status incentives to a more targeted, credit-based framework.

Mamudu said measures such as higher taxes on luxury vehicle imports and incentives for EVs and battery-related inputs indicate government support for local production and future mobility.

Nonetheless, Mamudu, who was a former Director of Policy and Strategic Planning at the National Automotive Design and Development Council (NADDC), argued that the reforms, on their own, were unlikely to transform the sector.

He noted that inflation had eroded the real value of incentives, while the narrow tariff gap between imported fully built vehicles, both new and used and locally assembled vehicles continued to undermine domestic manufacturers.

The persistent inflow of used vehicles at prices below local production costs, he added, further suppresses demand for locally assembled alternatives.

For the reforms to achieve their objectives, Mamudu called for stronger interventions, including higher tariff differentials in favour of local assembly, deliberate restraint on used vehicle imports and access to concessionary, single-digit interest financing for haulage operators, passenger bus fleets and shared-ride platforms that patronise locally assembled vehicles.

He said: “Without these complementary measures, the reforms risk remaining well-intentioned but marginal in impact, not just for Nigeria, but for its competitiveness within the wider African Continental Free Trade Area (AfCFTA) market of 1.5 billion people.”