Import slumps 32% as dealers trade safety for survival, salvage titles
• Classify vehicles with minor dents as salvaged units to evade high duties
• 80 per cent of imported vehicles classified as ‘ accidental’
• Clean vehicles out of reach of middle- class Nigerians
• Poor parts, roadside mechanics contribute to low repair cost
• Weak environmental, safety standards among pull factors
INVESTIGATIONS have revealed how Nigerian automobile dealers conceal vehicles with minor dents as salvage cars to qualify for 40 to 60 per cent duty rebates for such vehicles, a practice that may have become a survival measure against lull in the retail sector, thereby undermining efforts to scale up the revenue profiles of the country’s ports.
Whereas the majority of the dealers have resorted to the importation of badly damaged vehicles as new business strategies as other survival options have been exhausted, The Guardian learnt that a number of the dealers deliberately misclassify slightly- dented cars to benefit from the lower valuation and get away with a significant profit in the face of excruciating business conditions.
Beyond benefitting from lower valuation and duties, rising inflation and currency depreciation have weakened consumers’ capacity to buy imported used vehicles, thereby resorting to keeping their old vehicles or exploring options in Nigerian- used alternatives.
Findings suggest that approximately 80 per cent of vehicles imported into the countries are classified as salvaged with a large percentage coming out of ports with minor dents.
The Nigerian Ports Consultative Council ( NPCC) Port Performance Report, last year, put the number of imported used vehicles at 132,296 units, a 32 per cent decline from 194,550 imported the previous year.
Importers reportedly declare most of the cars as salvaged to dodge the standard customs duty of 20 per cent, plus a 15 per cent National Automated Council ( NAC) levy, totalling 35 per cent. According to the Nigeria Customs Service ( NCS), a vehicle must have significant chassis damage or airbag deployment to qualify as an accident with the shipping company expected to issue a salvage certificate confirming the vehicle’s status.
The NCS also conducts inspections to assess the damage extent for proper evaluation. But sources said the standards have been compromised in recent years as the cost of clearing hit the roof.
The Guardian had reported that the cheapest cars were being cleared at about N2.5 million in March when the import duty exchange rate was raised to over N1600/$. High costs including the customs import shipping costs, terminal charges and various other port- related fees, make clearing of vehicles costly.
Consequently, importers misclassify vehicles with minor bumper and backside dents as salvaged to capitalise on the duty rebate, thus reducing clearing costs, sources in NCS and agents disclosed.
The Comptroller General of the NCS, Bashir Adewale Adeniyi, last year, expressed concern over the surge in accident vehicle imports, which have dominated the ports for years.
During a visit by The Guardian to the Roll on Roll off ( Roro) terminals at Tin Can Island Port, most vehicles awaiting clearance were salvaged.
Similarly, at the Ladipo spare parts market, most vehicles unloaded from containers or parked in warehouses were salvaged, with roads nearby littered with such cars awaiting repair.
The Public Relations Officer of the Port and Terminal Multi- Services Limited ( PTML) Customs command, Muhammad Yakubu, also confirmed to The Guardian the new trick – importation of predominantly minorly- dented vehicles, which are mis- declared as salvaged to exploit duty rebate.
“Majority of what we have are dented vehicles, but people declare them as salvaged. They arrange a salvage certificate locally and claim it is an accident car, when in fact it is not. True salvaged vehicles have significant chassis damage or airbag deployment, not just a dented bumper”, he explained.
The importation of accident vehicles has surged due to economic hardships and the steep cost of clearing new vehicles, with prices of popular models increasing by about 400 per cent in the last four years.
High import duties and volatile exchange rates have driven Nigerian importers towards accident vehicles. In terms of costs, clean used vehicles cost between $ 8,000 to $ 10,000 on average whereas salvage vehicles range from $ 500 to $ 2,500 depending on the extent of damage and vehicle type. A PWC report highlighted that 63 percent of Nigerian households cannot afford a car without financial assistance, which remains largely inaccessible.
The report indicates that Nigeria has approximately 14 million cars on its roads, with used cars constituting about 70 per cent of vehicle sales. Notably, estimates suggest that over 80 per cent of the used imports were previously damaged.
In- depth checks have highlighted Nigeria as a primary market for vehicles from the United States and Europe, largely because auto dealers struggle to maintain profit margins on undamaged cars.
As Western countries intensify efforts to mitigate environmental impacts by promoting the adoption of newer, eco- friendly vehicles, less desirable cars find their way to developing countries like Nigeria. The vehicles, often deemed irreparable and unsafe in their countries of origin, consistently enter the Nigerian market.
Nigeria ranks third in importation of used vehicles from the U. S., trailing behind the United Arab Emirates and China.
Many of these imports are severely damaged vehicles that were once dismantled for parts. But even those with significant structural damage are repaired and used by owners out of necessity, experts have disclosed.
The Manager of Client Services at Inspired Cars, Iwayeye Olatunji, explained that purchasing a damaged vehicle abroad can cost around $ 2,500, whereas undamaged cars may go up to $ 10,000. He said given the high import duties, opting for a damaged vehicle becomes a more viable economic choice. Read the remaining part of this story on www. guardian. ng