Nigerian seaports are witnessing a surge in the importation of accidented and salvaged vehicles, many of them fresh junkyards abroad.

A flurry of factors is responsible for this unfortunate situation but the chief reasons are spiraling exchange rates, rising cost of new and pre-owned healthy vehicles, import loopholes and a distressed economy hungry for cheap wheels.

These factors have forced importers to go for wrecked vehicles that attract cheaper clearance costs and are easier to sell.

However, as importers cash in on the booming trade in accidented vehicles, experts warn that the nation is on a dangerous path of becoming a global dumping ground for automotive waste as safety takes the back seat.

Findings revealed that approximately 80 per cent of vehicles imported into the country are classified as salvaged with a large percentage coming out of the ports with minor dents.

100% rise in vehicle cost

Importers of used vehicles who spoke to Daily Sun said the cost of used vehicles has risen by over 100 per cent in the last few years as a result of the new policies of the government on the importation of used cars, coupled with the high exchange rates and high-cost of the clearance.

In January 2022, the Nigeria Customs Service (NCS) introduced a new valuation system known as the Vehicle Identification Number (VIN) valuation system used for allocating standard values to all vehicles coming into the country.

The system, according to Customs, automatically determines the value of import duty that an importer is expected to pay on any imported car immediately after the vehicle is passed through a dedicated scanning machine. This shuts room for any discretionary considerations.

Again, the Service also outlawed the importation of vehicles above 15 years old, insisting that such vehicles are overage and prohibited from entering the country.

Some of these policies have forced Nigerian automobile dealers to declare 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 due to the lull in the retail sector.

This undermines efforts to boost the revenue profiles of the nation?s ports.

Daily Sun learnt that 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 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 valuation.

However, sources said the standards may have been compromised in recent years as clearing costs go sky-high.

Importers said the cheapest cars are being cleared at about N2.5 million recently 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, according to agents.

Poor purchasing power

A recent visit to the Roll on Roll off (RoRo) terminals at Tin Can Island Port shows that most vehicles awaiting clearance were salvaged.

Speaking to Daily Sun, a vehicle importer, Joshua Adele, said Nigerian ports witnessed a surge in the importation of bad vehicles due to the high exchange rate and high cost of clearing goods at the nation?s Ports.

He said the dollar was too high for any importer to bring in good vehicles into the country, saying that a lot of car dealers are no longer in the business due to debts and servicing of loans.

?When you go around the RORO terminals like PTML and Five Star Logistics, you will see that the majority of the vehicles imported into those terminals are accidented ones. Hardly do you see good cars brought in because of high foreign exchange and high duty collection.

?If you buy a car of N10 million at the rate of N1,500 per dollar and before the car arrives, the exchange rate must have increased to about N1,700. You will look for additional money to clear it. How much do you want to sell the car? How many people can afford a car of N25 million in Nigeria today?

?This is why people go for bad cars because the duty is lesser,? he explained.

He, therefore, called on the government to ensure that there is a uniform exchange rate for the importation of goods, saying the government should also reduce the cost of clearing goods at the nation?s ports.

He said if the government can work on these things, the economy will improve and the cost of goods will come down tremendously in the country.

Also speaking with Daily Sun on the development, a former acting National President of the Association of Nigerian Licensed Customs Agents, Kayode Farinto, said that the government policy on revenue collection for vehicles is too harsh.

?There?s just one point. Let?s look at used vehicles. We are already collecting duty on used vehicles?what?s the need for the 15 per cent levy? I?ve said it at several forums that the government must look at this.

?But you know, every government has its own policy. The policy of Bola Tinubu is to make sure that we have new vehicles in place?whether electric or any of these newer models. Maybe that?s the position of the government. But if you are now bringing in new or non-accidented vehicles, the procedure and duties you?re going to pay will be too astronomical.

?That?s why people are bringing in the accidental ones and applying for ?840.? The 840 process involves inspection by the Controller to verify the vehicle is truly accidented. If the duty on a normal vehicle is $4,000, because it?s accidental, they?ll give you a rebate and say go and pay $2,000. So the owner goes and pays $2,000 and goes to repair the vehicle. It?s all because of government policy,? he explained.

However, he said if the government removed the 50 per cent levy and looked at the other issues and other taxes on used vehicles, nobody in Nigeria would want to ride in an accidented vehicle.

He said accidented vehicles always have their disadvantages, adding that out of all the 100 per cent accidents on the road, 35 per cent is contributed as a result of accidented vehicles.

?This is because most of the accidented vehicles have actually had their chassis affected. When an accidented vehicle is moving on the road, the moment that vehicle is on the speed limit of 100, it starts vibrating, and it can cause a commotion, particularly those that are commercial. Before you know it, if there is any little impact, everything will just scatter. Government should review that 50 per cent levy,? he explained.

He urged the government to bring down or cancel the levy on used vehicles.

?Let us reduce the rate of duty on used vehicles because fingers are not equal. Before now, Nigerian graduates could afford used vehicles, convert them to Bolt or Uber, and make a living. But now, it?s very difficult. That?s why the government must listen in this area.

?This is the only area that we are pushing that the government of Asiwaju Bola Ahmed Tinubu should listen to. We even learned that most of the banks are now going for Nigerian used vehicles. Even the House of Assembly is going for Nigerian used vehicles because it is very expensive,? he said.

Another importer, Adeboye Aina, said high import duties and volatile exchange rates have driven Nigerian importers towards accidented vehicles.

According to him, 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.

?The importation of accidented vehicles has surged due to economic hardships and the steep cost of clearing new vehicles, with prices of popular models increasing by about 400 percent in the last four years,? he added.

He said the only solution for the government is to ensure that there is a predictable exchange rate, saying there is an urgent need to reduce the high cost of clearing goods and relax some of its policies on the importation of vehicles. (Daily Sun)

Update news