Nigeria’s automotive sector is going through one of its most active periods of policy change in decades. Across 2025 and into 2026, the Federal Government has moved on several fronts, revising import tariffs on fully built vehicles, tightening licensing requirements for assemblers, exempting electric vehicles from key duties, and signing new agreements aimed at building domestic assembly capacity.
Taken individually, each of these moves might appear to be a routine fiscal adjustment. But taken together, they are a coordinated push toward automotive localisation, one that has first-hand implications for how original equipment manufacturers (OEMs), component suppliers, and mobility investors should view Nigeria as a market.
For a country that imports the large majority of its vehicles, much of it as used cars from Europe, Asia, and North America, this change is quite significant. Nigeria’s new vehicle sales reached 13,304 units in 2023, a rise of nearly 19% from the year before, and the country remains Africa’s largest economy and one of its largest vehicle markets by population.
The combination of import substitution policy, tariff restructuring, and EV-specific incentives is now creating the outline of a new automotive investment landscape, with great opportunities for OEMs and suppliers keen on engaging with its ins and outs.
About the transitioning tariff regime
For years, Nigeria’s vehicle import regime was built around high protective tariffs. Fully built passenger vehicles, including four-wheel drives and station wagons, faced combined duties of up to 70%, comprising a 35% import duty and an additional 35% levy. The stated rationale was to discourage imports, push demand toward domestically assembled vehicles, and build a local manufacturing base.
In practice, the policy produced a mixed record. While it supported the emergence of assemblers such as Innoson, Stallion Group, and Lanre Shittu Motors, it also made vehicles unaffordable for many Nigerians and fuelled a large informal import and smuggling economy.
In April 2026, the Federal Government announced a significant recalibration. Under the new 2026 Fiscal Policy Measures, tariffs on imported used commercial vehicles and fully built passenger vehicles were reduced from 70% to 40%, reversing rates that had been in place since 2015. This recalibration covers 127 tariff lines in total, featuring vehicles, rice, and other key commodities, and wholly replaces the 2023 fiscal framework.
But the reform has divided opinion. Vehicle dealers have generally welcomed the change as a relief for consumers facing high vehicle costs, while some economists and industry stakeholders have raised concerns that lower tariffs on fully built vehicles could weaken Nigeria’s still-nascent local assembly industry, just as that industry was beginning to gain traction.
The Government has responded by paring the tariff reduction with a parallel green tax structure, a new levy targeting larger, fuel-intensive engines common in SUVs and luxury vehicles, while exempting smaller, more efficient cars, electric vehicles, mass transit buses, and locally manufactured components.
For investors, the lesson here is that Nigeria’s tariff environment is not static, nor is it simple. One would say it is being actively rebalanced, with different vehicle categories, engine sizes, and production origins treated very differently depending on whether they support or compete with the localisation agenda.
The EV carve-out is a clear policy indicator
While the wider tariff regime has moved in a more liberal direction for conventional vehicles, the treatment of electric vehicles tells a different story. It speaks of deliberate, sustained preferential treatment. As of January 2024, import duties on EVs were eliminated, and under the updated 2025 framework, EV import duties now range from 10% to 20%, depending on vehicle type, with a 15% National Automotive Council levy added. Electric vehicles are also exempt from both Value Added Tax and the Import Adjustment Tax that applies to larger-engine conventional vehicles.
This preferential treatment is matched by binding localisation requirements. New regulations mandate that foreign automakers partner with licensed Nigerian assemblers and establish local assembly plants within three years to retain favourable import terms. Assembly operations must meet a minimum production threshold of 5,000 units per year, with penalties for non-compliance reaching 250 million naira.
Crucially, the policy also sets a local sourcing target. At least 30% of vehicle components must be sourced locally by 2030, rising toward the National Automotive Design and Development Council’s general target of 30% of all vehicles sold being locally manufactured EVs by 2033. So what does this say? It says Nigeria is not just opening its doors to EV imports; it is using EV-favourable tariffs as leverage to pull assembly, component sourcing, and manufacturing investment onto Nigerian soil.
Public-private partnerships are driving the ecosystem
The clearest evidence that this policy framework is translating into real activity can be found in Lagos. In 2024, the Lagos State Government committed 260 million dollars to expand its LagRide fleet in partnership with CIG Motors, with 1,000 of the new vehicles designated as electric.
CIG Motors, which has operated in Nigeria since 2014 as a distributor and assembler for GAC Motor, Wuling Motors, JMC Motors, Dongfeng Motors, and FAW Group, entered a joint venture with the Lagos State Government to establish a vehicle assembly plant supporting the LagRide smart taxi scheme.
By September 2025, 100 EVs had already been added to the LagRide fleet, with plans for more than 3,000 EVs across the platform within three years. This subnational ambition is backed by the national targets. Lagos State has set a goal of electrifying 50% of its public transport by 2030, aligning with the federal Energy Transition Plan’s aim of a full transition to electric vehicles by 2060.
Elsewhere, the assembly landscape is also growing. In early 2026, Nigeria’s Ministry of Industry, Trade, and Investment signed a memorandum of understanding with South Korea’s Asian Economic Development Committee to build an EV assembly plant in Kano with an annual production capacity of 300,000 vehicles, which would represent a step-change for the sector.
SAGLEV Electromobility operates a kit-based assembly plant in Imota, Lagos, producing both passenger and commercial EVs, including its Naomi range with a stated driving range of 330 to 430 kilometres, and has partnered with Dongfeng Motor Corporation to assemble electric passenger vans from imported kits.
Hybrid Motors, meanwhile, is building manufacturing facilities in Lagos and Abuja with a combined projected capacity of 70,000 vehicles under its homegrown Acely brand, alongside a financing platform aimed at making EV ownership accessible to fleet operators and ride-hailing drivers at single-digit interest rates.
Two-wheeled electrification is moving in parallel. Battery-swapping operator Spiro had more than 100 stations operating by September 2025, primarily across Lagos and Ogun State, with plans to expand to 2,000 stations during 2026. And in the consumer ride-hailing space, BYD’s formal entry into Nigeria in March 2025, with showrooms in Lagos, Abuja, and Port Harcourt, and service support through CFAO/LOXEA Nigeria, shows that established global EV brands now view Nigeria as a market worth a direct retail presence, and not just a kit-assembly destination.
Where the opportunity lies for OEMs and suppliers
For international OEMs and component suppliers, the most viable opportunities in this environment are, for the most part, unlikely to be in finished-vehicle export. The tariff structure, the local sourcing mandates, and the licensing requirements are all designed to push value addition toward Nigerian soil.
The most commercially viable entry points instead lie in component manufacturing aligned with the 30% local sourcing requirement, since suppliers who can establish or partner into local production of batteries, wiring harnesses, seating, body panels, and other components position themselves directly within the policy’s intended supply chain.
Equally significant is assembly support services. The proliferation of kit-based assembly operators, from CIG Motors and SAGLEV to Hybrid Motors and the Kano facility creates ongoing demand for technical partnerships, quality assurance support, training, and equipment supply that established OEMs and Tier 1 suppliers are well placed to provide.
Distributor and assembler partnerships are another avenue, particularly for OEMs that do not yet have a Nigerian presence, since the licensing framework specifically requires foreign automakers to partner with Nigerian-licensed assemblers to access favourable terms, meaning the right local partner is now a regulatory necessity, not just a commercial convenience.
But some complexities cannot be overlooked
But none of these opportunities comes without some friction. Nigeria’s tariff regime, as the 2026 reforms show, is subject to change with limited notice, and different vehicle categories, engine sizes, and origins are treated very differently under overlapping duty, VAT, and levy structures.
Licensing requirements for assemblers have significant compliance obligations, including production minimums and penalties for non-compliance that can reach into the hundreds of millions of naira. Plus, partner selection in a market where assembly capacity, brand reputation, and government relationships vary considerably between operators is not a decision that should be made on the basis of just marketing materials.
All these present a terrain where a well-informed advisory partner is all one needs to make a difference.
How AMENA AFRICA supports investors in this case
Given the expertise amassed across different sectors in the continent, AMENA AFRICA works with international businesses seeking to establish a presence and expand continentally. In Nigeria’s automotive and mobility sector, our approach is based on the practicalities already outlined.
For OEMs evaluating whether to enter through component manufacturing, assembly partnership, or distribution, our market entry consulting services provide the country-level analysis one would need to choose the right model, accounting for current tariff treatment, local sourcing obligations, and the licensing approach specific to the category involved.
Partner selection is also where our distributor and partner search capabilities are most essential. With a presence across Nigeria, Kenya, Ghana, South Africa, and Mauritius, we identify and vet licensed assemblers, distributors, and joint-venture candidates against the most important criteria, including production capacity, compliance track record, and relationships with relevant regulatory bodies such as the National Automotive Design and Development Council.
For suppliers targeting the local component sourcing requirements, our investment promotion and growth strategy work helps map where component-level demand is concentrated, be it around Lagos’s assembly cluster, the upcoming Kano facility, or emerging hubs in Ogun State, and how to structure an entry that positions a business advantageously as sourcing targets tighten toward 2030.
Nigeria’s automotive policy landscape will continue to change as the Government balances consumer affordability, fiscal needs, and its localisation goals. For OEMs and suppliers prepared to engage with that, this moment presents a true first-mover advantage in a market that is actively building its assembly ecosystem.
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