The 35 per cent levy on used cars expected to take effect from January 1st, 2015 has been deferred to April 30, 2015.
The Director-General/CEO National Automotive Council (NAC), Aminu Jalal in Abuja Wednesday explained in a press release that the deferment became imperative as a result of the delay occasioned by the inability of a partner bank from South Africa to commence operation in Nigeria due to the Ebola disease outbreak.
Jalal said the arrangement was for the establishment of affordable vehicle finance scheme that would allow Nigerians access loans at affordable interest rate to purchase new vehicles, adding that government cannot afford to put more burden on Nigerians by increase in levy on used vehicles when the finance scheme has not taken off.
“The arrangements for the establishment of the affordable vehicle finance scheme suffered delay of about four months due to the Ebola Viral Disease. The staff of the collaborating bank, Wesbank of South Africa, delayed their planned trip to Nigeria to set up operations from September 2014 to January 2015.
“Hence the new date for the start of operations of the financing scheme is April 2015. Accordingly, the CME/HMF has been asked to extend the levy deferment on used cars to 30 April 2015.”
“The government earlier deferred the imposition of the levy on used cars to December 31st 2014 to enable assembly plants ramp up enough production to satisfy demand. As you know, VON is assembling Hyundai and Nissan cars, PAN is assembling Peugeot cars, IVM started assembling cars and Dana Motors is assembling Kia cars.
“VW, Honda and Renault, amongst others, are expected to start assembly operations next year. VON, IVM and Kia also have cars costing N1.5 million – N2 million. So the industry can produce the vehicles we need in 2015.”
He said tariffs are increased on fully built units (FBU) vehicle imports under the market development, which is one of the five elements of the automotive policy. He, however, said these tariffs are to be reduced gradually over the years, as the vehicle assembly and local content operations gain momentum.
Putting the Nigerian vehicle market at approximately 400,000 vehicles annually, with about 300,000 imported as used, Jalal said the government has to balance vehicle supply and affordability with the production by the assembly plants.
He added that government has however put some measures in the policy to ensure vehicle supply and affordability.
These measures, he said, will ensure that assembly plants assemble affordable vehicles, the plants will import two FBU at concessionary duty for every one completely knocked down (CKD) and semi knocked down (SKD) they assemble in 2014/15. It will be one to one in 2016/17 and CKD and SKD (1) and SKD (2) tariffs are 0 percent, 5 percent and 10 percent respectively.
The measures, he said, will also allow new investors to be able to import FBU at concessionary duty in numbers to fill the gap between the supply by the assembly plants and demand and the affordable vehicle financing scheme to be set up to enable new vehicles purchase by Nigerians.
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