After Decades of Tokunbo: Can Nigeria Really Build a Home-Grown Used-Car Market?

Afusat Adebayo

August 31, 2026
11 min read
Tokunbo

For decades, imported used vehicles, popularly known as “Tokunbo,” have dominated Nigeria’s automobile market, providing millions of Nigerians with an alternative to the high cost of brand-new cars.

But the Federal Government now wants to change the equation.

The National Automotive Design and Development Council (NADDC) is advocating a shift from Nigeria’s heavy dependence on foreign-used vehicles to a home-grown used-car market built around vehicles originally purchased and used in Nigeria.

The proposal, championed by NADDC Director-General, Otunba Oluwemimo Joseph Osanipin, is based on a simple idea: a vehicle bought new in Nigeria should not leave the Nigerian market after its first owner is done with it. Instead, it should be sold to another Nigerian, then another, creating a domestic cycle of vehicle ownership.

Osanipin recently argued that used vehicles are not inherently bad. His concern is Nigeria’s dependence on vehicles discarded or sold off in other countries, with huge foreign exchange leaving the country to finance their importation.

But moving from Tokunbo to Nigeria-used vehicles will not be easy.

It will require government policy, local manufacturing, affordable vehicle financing, reliable vehicle inspection, credible ownership records and, perhaps most importantly, the confidence of Nigerian motorists.

The Government’s Argument

From the government’s perspective, the issue goes beyond used cars.

It is about building an automotive industry that produces vehicles, creates jobs, develops local components and keeps more money within the Nigerian economy.

Nigeria has nearly 40 licensed vehicle assembly plants with combined installed capacity of more than 600,000 vehicles annually, yet production remains far below that potential. NADDC has identified factors including inadequate financing, low patronage, grey imports and other structural problems affecting the industry.

The Federal Government has consequently adopted several measures designed to stimulate local production.

In May 2026, NADDC and the Bureau of Public Procurement signed a Nigeria-First automotive procurement framework requiring government agencies to prioritise Nigerian-assembled vehicles in government procurement. The objective is to create demand for locally assembled vehicles while supporting jobs and industrial capacity.

The government has also been tightening standards around imported vehicles. NADDC and the Standards Organisation of Nigeria have introduced the Vehicle Conformity Assessment Programme, while the Federal Government is pursuing measures aimed at preventing Nigeria from becoming a destination for unroadworthy and end-of-life vehicles.

The End-of-Life Vehicle programme is another part of the broader reform agenda. Government plans include formalising vehicle recycling and creating economic opportunities around dismantling, refurbishment, parts recovery and recycling.

For policymakers, therefore, the ambition is much bigger than reducing Tokunbo imports.

It is about creating a complete automotive ecosystem.

But What Do Dealers Think?

For vehicle dealers, the proposed transition presents both an opportunity and a threat.

Nigeria’s used-car dealers have spent decades building businesses around imported vehicles. They understand what Nigerian buyers want, which brands sell quickly, where to source vehicles and how to move them through the ports and distribution networks.

Any policy that significantly changes the supply of imported used vehicles will inevitably affect their businesses.

And the cost of imported vehicles has already become a major concern.

Recent market data reported by BusinessDay showed that entry-level Tokunbo vehicles were averaging close to ₦30 million, while the average asking price for imported used vehicles had risen to around ₦45 million—almost twice the level recorded two years earlier.

Dealers therefore face a difficult market.

On one hand, they need access to vehicles that consumers can afford.

On the other, they must contend with government efforts to encourage local production and tighten controls on imported used vehicles.

The industry’s concern is likely to centre on one fundamental question:

What will replace Tokunbo if imported used vehicles become harder or more expensive to bring into Nigeria?

A transition that reduces imports without increasing the supply of affordable alternatives could simply make vehicle ownership more expensive.

That concern is particularly important because even when government recently reduced import levies, dealers and logistics stakeholders warned that consumers should not expect an immediate collapse in vehicle prices because exchange rates, port charges and logistics costs remain significant factors.

For dealers, therefore, the issue is not necessarily resistance to local manufacturing.

It is whether the government can create a market in which locally assembled and Nigeria-used vehicles are commercially viable.

The User’s Voice: “Can I Afford the Alternative?”

For the ordinary Nigerian motorist, the debate is much less complicated.

The question is:
How much will the car cost me?

Most consumers are not primarily concerned about whether a vehicle was assembled in Nigeria, Japan, Europe, Korea or China.

They want a vehicle that is:
affordable; reliable; fuel-efficient; easy to maintain;
readily repairable; supported by spare parts; and capable of retaining its resale value.

That is why Tokunbo became so powerful.

It filled a gap created by the limited supply and high price of new vehicles.

A Nigerian worker who cannot afford a new ₦50 million or ₦60 million vehicle may look for a used alternative. A commercial driver has an even stronger incentive to seek the cheapest reliable vehicle because the cost of acquiring the vehicle ultimately affects the cost of providing transport.

This means policymakers cannot expect motorists to abandon Tokunbo simply because the government wants to promote local vehicles.

The alternative has to make economic sense.

The Trust Problem

There is also a psychological barrier. Would Nigerians trust a Nigeria-used vehicle enough to pay a premium for it?

The answer may depend on how transparent the domestic used-car market becomes.

A buyer looking at a five-year-old vehicle would want to know:

Who was the first owner?
Was it privately owned or used commercially?
How many kilometres has it travelled?
Was it involved in an accident?Was the odometer tampered with?
Was it properly serviced?
Has the engine been replaced?
Does it have outstanding ownership or financing issues?

Without reliable answers, buyers may continue to prefer imported used vehicles because of perceptions about their condition, mileage and service history.

This means Nigeria will need more than car dealerships.
It will need a trusted vehicle-information system.

A national database that records vehicle registration, ownership transfers, inspection history, mileage, accident records and major repairs could transform the used-car market.
It could also reduce fraud.

A Dealer Could Become More Than an Importer

The transition could eventually force Nigerian car dealers to change their business models.

Instead of concentrating primarily on importing vehicles, dealers could become professional certified-used-car operators.

A customer could bring a locally purchased vehicle to a dealership.

The dealer inspects it.
Its ownership and service history are verified.
The vehicle is refurbished where necessary.
The dealer certifies it and resells it to another Nigerian buyer.
Banks could finance the transaction.
Insurance companies could provide cover.
A digital platform could record the ownership transfer.

That is how a genuine domestic used-car ecosystem could emerge.

In such a system, the dealer does not need to import every vehicle he sells.

He can make money from the circulation of vehicles already inside Nigeria.

The Financing Gap

But there is one major obstacle: Nigerians must first be able to buy new or relatively new vehicles before there can be enough Nigeria-used vehicles for the second-hand market.

This is where vehicle financing becomes critical.

If local assembly plants produce cars that ordinary Nigerians cannot afford, those vehicles will not enter the domestic used-car pipeline in sufficient numbers.

The government therefore needs to make automotive financing a central part of the transition.

Lower-cost vehicle loans, longer repayment periods, leasing arrangements and financing schemes for commercial transport operators could help.

Without this, the policy risks becoming a supply-side strategy without sufficient consumer demand.

What About Transport Operators?

Commercial transport operators are perhaps the most sensitive group in the debate.

A bus, taxi, tricycle or truck is not simply a vehicle to them.
It is an income-generating asset.

If the cost of acquiring that asset rises sharply, operators will have to recover the additional cost through fares or freight charges.

That could eventually affect commuters and businesses.

Therefore, any transition away from Tokunbo must consider the transport sector.

Government could develop targeted financing schemes for commercial vehicles, particularly buses, trucks and other vehicles that support the movement of people and goods.

If locally assembled vehicles are durable and cheaper to operate, transport operators could eventually become some of their biggest customers.

The Port and Logistics Dimension

The Tokunbo economy also supports a large logistics chain.

Vehicles arrive through Nigerian ports.
Clearing agents process them.
Truckers move them.
Dealers distribute them.
Mechanics repair them.
Spare-parts traders support them.

Thousands of people make a living from the ecosystem.

A significant reduction in imported used vehicles will therefore have consequences beyond the car dealership.

However, the decline in finished-vehicle imports could create another logistics opportunity.

If local assembly expands, Nigeria will need to import components and raw materials, transport them to assembly plants and distribute finished vehicles to different parts of the country.

The logistics business could therefore change rather than disappear.

The Circular Economy Opportunity

The home-grown used-car proposal also connects naturally with vehicle recycling.

If vehicles are bought and resold several times within Nigeria, eventually many will reach the end of their useful lives.

Instead of abandoning them or allowing their parts to enter an informal recycling chain, Nigeria could create a formal system for dismantling and recovering valuable components.

The Federal Government has already announced plans for an End-of-Life Vehicle programme, including a mandatory recycling fee from 2026. NADDC estimates that vehicle recycling could generate substantial economic activity while creating jobs in dismantling, logistics, refurbishment and parts recovery.

That creates the possibility of a cycle:

Manufacture → first owner → second owner → third owner → refurbishment → parts recovery → recycling.

Such a cycle would be very different from the present model in which Nigeria depends heavily on vehicles already used abroad.

The Stakeholders’ Challenge

Automotive manufacturers want protection and a viable market.

Dealers want access to vehicles that customers can afford.

Government wants local production and foreign exchange savings.

Transport operators want affordable and reliable vehicles.

Motorists want value for money.

Banks want customers who can repay vehicle loans.

Insurance companies need accurate vehicle information.

Ports and logistics operators depend on automotive cargo.

Mechanics and spare-parts dealers need a large vehicle population to sustain their businesses.

All these interests must therefore be considered.

The success of the policy will depend on whether government can bring these groups into one coherent system.

The Danger of Moving Too Fast

There is a temptation in industrial policy to see import restriction as the easiest solution.

But Nigeria’s experience suggests that restrictions alone do not automatically create competitive local industries.

If Tokunbo imports become difficult while locally assembled vehicles remain too expensive, consumers will simply face fewer choices and higher prices.

That could hurt low- and middle-income motorists the most.

The transition therefore has to be gradual.

Nigeria must first strengthen local assembly, improve component manufacturing, provide affordable financing, improve vehicle quality, establish transparent vehicle histories and ensure reliable after-sales support.

Then the domestic used-car market can grow naturally.

So, Can Nigeria Do It?

Yes, but not by simply declaring the end of Tokunbo.

Nigeria can build a home-grown used-car market if it successfully creates the conditions for Nigerians to buy new and locally assembled vehicles in significant numbers.

The government already has several pieces of the puzzle: the Nigeria-First procurement policy, stronger vehicle conformity standards, local assembly initiatives and the planned end-of-life vehicle framework.

But the missing pieces remain affordability, financing, consumer confidence and consistent policy.

The Nigerian buyer must see a locally assembled vehicle and think: “I can afford this.”

The dealer must see it and think: “I can sell this.”

The bank must see it and think:
“I can finance this.”

The mechanic must see it and think: “I can maintain this.”

And the owner must know that, five years later, another Nigerian will be willing to buy it.

That is when Nigeria will truly begin moving from a Tokunbo-dependent market to a Nigerian automotive market.

The real test of the Federal Government’s policy is therefore not whether it can reduce the number of Tokunbo vehicles entering Nigerian ports.

The real test is whether it can create a domestic vehicle market that Nigerians willingly choose.

Until that happens, Tokunbo will remain difficult to dislodge, not because Nigerians necessarily prefer foreign-used vehicles, but because for millions of motorists, they remain the most accessible answer to an expensive mobility problem.This version gives the story a more balanced newspaper-analysis feel, with the government, dealers, motorists, transport operators, manufacturers, financiers and logistics sector all represented without fabricating quotations.

After Decades of Tokunbo: Can Nigeria Really Build a Home-Grown Used-Car Market?

Afusat Adebayo

Afusat Adebayo

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