Rising cost of vehicles: Nigerian dealers turn to accidented cars for profit

AS the rising cost of vehicles has discouraged many Nigerians from desiring to purchase brand new cars and used ones have become a more attractive proposition, many dealers in the country have resorted to importing more accidented vehicles to make profit. 

Citizens that usually relied on what is usually referred to as “Tokunbo” (second-hand imported) vehicles have found the costs of such cars increasingly prohibitive and are forced to patronise imported accidented ones that are relatively cheaper. 

The Nigerian Tribune investigation revealed that the situation has made the country’s automotive industry to be- come predominantly infected with more of such imported second hand accidented vehicles. It was found out that the main attraction for such damaged vehicles is the dwindling purchasing power of the Nigerians, which makes it impossible for most prospective car owners to own either brand new or clean imported used cars. In recent times, the influx of such accidented vehicles into Nigeria has changed the narrative in the tokunbo vehicle market as many dealers now import, repair and sell at prices relatively lower than those of non-accidented vehicles. 

A source at the Standards Organisation of Nigeria (SON) told the Nigerian Tribune that there are no standards against the importation of accidented vehicles into Nigeria. 

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“The Nigerian Customs Service (NCS) may be allowing those vehicles to pass through the ports because they pass the emission test and other vehicle worthiness test,” the source volunteered. 

Our investigation further revealed that car dealers are the only people smiling in the automobile sector. 

In a chat, a car dealer, Adeyemi Segun, told our reporter that accidented ‘tokunbo’ vehicles have high market value in Nigeria, noting: “When you bring in an accidented car here and repair it, they become first grade tokunbo and you get a good price for it. 

“Very few people have the capacity to buy new cars in the country. So, when they see a clean second hand car with a reasonable price, they buy,” he stated. 

An expert, a source from the Stallion Group also told Nigerian Tribune that the problem with the automotive industry is high price for new vehicles. 

He blamed the situation on the unavailability of local content, adding: “Even bolts and nuts, we import. It is important that we produce spare parts here in order to beat the price of new cars down. Currently, the rise in dollar is another factor fueling high price of these vehicles. 

“New vehicles are really expensive in Nigeria; Hyundai 1.2 litres which is one of the lowest cars assembled here is sold for N7.2 million; Honda City, 1.5 litres in a similar category is sold for 9.4 million.

“Nissan Almera, 1.5 litres is selling for N8.25 million while Changan CS 35, 1.6 litres is sold for N8.5 million. 

“How many people in Nigeria will afford to buy these cars at this rate? These are the lowest cars of each company but see the prices. If you are talking of modern cars, then you should know that the prices are really high,” he stated. 

Another dealer, Hassan Bello, said tokunbo cars business is lucrative, noting that “the market is high for second-hand vehicles. You know there is no money in the country so many people are buying used cars. 

“Now, due to the fact that there is a market boom for second-hand cars and it is also cheap to buy accidented vehicles overseas, import, repair and sell them at a good price. There is a rush in the business.” 

According to an agent at the Apapa port who spoke to Nigerian Tribune under the condition of anonymity, the influx of accidented vehicles into Nigeria is a disturbing trend that is hampering the development of the automotive industry. 

“The rush for accidented vehicles is high. This is because with $2,000 you can buy an accidented Toyota car in US, put together import fee, clearing at the port and repairs, you may still spend less than N2 million. When the car is repaired, it may be sold for N9 million while the new version of the same car may be selling for N16 million. 

“So, with this kind of arrangement and also considering our economic status, if deliberate actions are not taken by the government to encourage the use of new cars by way of hire purchase or other financing schemes that may offer low interest loans, Nigeria vehicle market will not grow,” he noted. 

He said the country was getting too comfortable with used vehicles from other developed nations being dumped on her, saying: “Very few people are aspiring to buy new cars in Nigeria. At the moment, the dream of many Nigerians is to drive a clean second-hand car. 

“So, you see, gradually we are forgetting our vehicle manufacturing sector because we no longer believe in our capacity as a nation to produce vehicles for our own usage,” he stated. 

Another expert in the automotive industry described the high rate of accidented cars being imported into Nigeria as worrisome, asserting that the trend has paralyzed the country’s thirst for new cars, putting the nation’s manufacturing sector, particularly the automobile sub-sector, in danger of ill growth. 

Speaking to Nigerian Tribune, a source from a Honda motor mall lamented that the influx of accidented cars into the country has further sunk the willingness of Nigerians to purchase new cars. 

“The truth of the matter is that people are buying accidented vehicles because they are cheap. People go to US or Canada and buy these vehicles; they clear them at the ports, repair them and still sell them at a cheap rate compared to the price of new cars. 

“If you look at these accidented vehicles after they have been repaired, you wouldn’t know these are the same ugly cars that were brought in. They are clean and the price may be half of the brand new one. This serves the need of the Nigerian having a near-new car at a moderate rate. 

“For instance, a brand of new Honda may be selling for N7 million, but the same brand of vehicle that has an accident may be sold for N900,000 and you may take the same amount to import, clear and repair the car. Now, if you put that vehicle in good shape and you are selling it for N3 million or N3.5 million and this car looks new, which one do you think people will go for?” he questioned. 

He said that the Federal Government had not done enough to ensure the commencement of a vehicle financing scheme, arguing, “you see, government is not serious with this thing. How can people buy new cars when the capacity to purchase is not there? 

“In June 2019, the managing director of the National Automotive Design and Development Council (NADDC), Jelani Aliyu, said the financing scheme was due for take off, but until now, nothing has been done. So, you wouldn’t blame people for buying accidented cars but of course it points to the fact that we as a country have regulating issues.” 

Experts believe that the safety of accidented vehicles can- not be guaranteed as one told the Nigerian Tribune “that is a regulatory issue, but there are no regulations; there is no one saying you cannot do this or that in automobile industry. Nobody is checking that the right measurement or specifications are followed to ensure the safety of life and properties.” 

Industry stakeholders worry that while accidented car dealers smile to the bank, the pioneer companies under the Nigerian Automotive Policy have a hard time selling the few vehicles they assemble in the country.