When a Nigerian is being congratulated on acquiring a ‘new car’, bonnet open and prayers being said, possibly with some refreshments by a corner, it is often a used car.
Even before current economic realities, used cars have been the best bet for many to become car owners. These are imported from most Western countries, especially those with Left-hand-drive, notably the United States, where Nigeria imported N75 billion worth of used vehicles between July and September 2022 alone, according to data from the National Bureau of Statistics (NBS).
This article presents a first-hand guide to how a vehicle was imported from the US to Nigeria, all that it entailed and how Nigeria ‘almost happened’ in between, especially when it came to making payments, and how each challenge was solved. You are also going to need fairly good internet as the first step in ensuring Nigeria does not happen to you in this process.
First, the search
Registration had been done on some vehicle auction platforms since last year, 2021, out of journalistic curiosity and was to be explored ‘later’. However, by March 2022, this reporter needed to try the process.
User accounts had been created on Copart and IAAI, two American primary auction providers that are also described as the biggest in the industry. Later, registrations were done on Auto Auction Mall and AutoBidMaster who can be described as secondary auction providers; all with very distinct offerings as would be later discovered.
Searching for a car could be easy, yet time consuming. It could be easy if one did not mind buying an accident car, harder if preference was for one in good or perfect condition and often with a ‘clean title’.
Each of these company’s websites had varying search interfaces for prospective buyers; you could search by year, make, models and other parameters such as the level of damage to any potential vehicle. After all, many of these vehicles were on auction because they had been involved in an accident or had some other issues; most, but not all.
A bit on titles; there is the Clean Title (could be called best grade), Salvage Title (has been involved in an accident), Bill of Sale (do not buy this if you intend shipping out of the US e.g., to Nigeria), Junk Title (also called non-repairable). There are several other types of titles, many varying by the state where the car was last registered. It is important you note the title on a car and what it means before you purchase it. If not, unpleasant stories could follow.
The search process culminating in this review started in March this year, and if the preference was for a Toyota Camry or Corolla, the process may have concluded sooner as there are usually more of these on offer. However, they are also subject to stiff competition from (especially) other Nigerian bidders, making them likely to be expensive at the end of auction, but again, not always. Luck, determination and resilience to search were found to be key in the bidding process, but all these do not matter if one had a fat wallet.
Above all, it is important to calculate the final bid price one might pay, including auction fees, an estimate of shipping and import duties, to be sure one was not importing an overpriced vehicle even before it left the auction lot in the US.
The first parameter is often, what kind of car do you plan to own? A Toyota Camry, Honda Civic etc? Next is; what kind of condition am I willing to tolerate this car to be? While asking or answering this question, as you search, it is good practice to factor in estimated repair costs ahead of any accident vehicle you intend to purchase. You should also know that the more the parts you have to change when your new car arrives in Nigeria, the less of a Tokunbo it would be, and the more of a Ladipo 2.0 model it would actually be.
It is important to calculate the bid price one might pay, including auction fees, an estimate of shipping and import duties, to be sure one was not importing an overpriced vehicle even before it left the auction lot in the US.
Picking an auction platform
As at this report, IAAI membership costs $200 a year, for both individual and business accounts. On Copart there are two grades: $99 for basic and $249 (plus $400 refundable deposit) for premier. Difference between the two on Copart is in number and value of cars one could bid without paying additional deposit.
It is also important to note renege fees, which is penalty for not completing payment after winning an auction. For IAAI it is $1,000 or 15 percent of sale price, whichever is greater and Copart is 10 percent of the final sale price or $600 – whichever is higher.
It should be noted that a difference between Individual and Business accounts is that; while some types of cars cannot be bought by an individual licence holder, business accounts have access to and can buy all vehicles. This could suddenly matter if the car you really want happens to be one requiring a business licence. This is also mostly determined by states, as some require having a business licence and a solution to this is through brokers, which is where Auto Auction mall and AutoBidMaster come in.
This reporter used Auto Auction Mall, from bidding to final purchase, and even shipping to Nigeria.
Using Auto Auction Mall
The car that was eventually bought was originally found on Copart, so why was the purchase not done there? Two factors made it necessary to use the company which this reporter describes as a secondary auction provider. The first reason was payment.
On Copart, as at the time of carrying out this ‘experiment’ to buy and ship a car to Nigeria, payment – especially through wire transfer which is the standard for international buyers – could only be made directly from an account bearing the same name as what you used to register on the platform. While there were other payment options, these were mostly restricted to US customers.
The problem here was getting dollars out of Nigeria. If one applied for a Form M and the money was not processed within Eight (8) days, then the deposit of $600 dollars would be forfeited (just like that).
Even though its competitor IAAI, said in response to an email enquiry at the time that a third-party could make the payment on behalf of a buyer, it did not have the choice of car needed.
The second reason; as a first-time buyer, the nuances of engaging a shipping company, first to move the vehicle from the auction lot, and then to the port for actual shipping was still a new terrain. If one did not move the car quickly after purchase, storage fees of $50 per day would apply after 3 days, which could accumulate very quickly and if care is not taken surpass the value of the car (depending on final bid at auction). The car eventually purchased was not moved from the auction lot for about 2 weeks; another lesson to be highlighted later.
However, by using Auto Auction Mall (AAM), this reporter solved two problems: payment and shipping.
The rule of forfeiting one’s $600 deposit (if not paid within stipulated timeframe) also applied on AAM with the difference that third-party payments were accepted. There was also a provision by the company’s Lagos office to help buyers in sourcing dollar payments in the US, eliminating the challenge of being unable to send from Nigeria or finding someone in the US to make the payment. Apart from the risk of losing one’s deposit if buying directly on Copart, using a broker like AAM also meant one could bid on any vehicle (including those restricted to business licence holders); the caveat though, at the time of going through this process, one could not bid directly.
Now that the reason for preference has been established, it should be noted that AAM also required registration through its website, and before they bid for you, the $600 deposit had to be paid, which was done using a Dollar card, or through naira-dollar arrangements the Lagos office says it facilitates. It should also be noted that the dollar card option used by this reporter is not accepted for the complete car payments as it is described as an unsecured form of payment prone to disputes.
Bidding and selecting a car
A 2015 BMW X3 was the first car spotted, in good condition and even classified under what is called ‘Copart Select’. This reporter was already seeing himself in a ‘White BM’, driving carefully through the chaotic Lagos roads, until the auction day when another buyer’s bid of around $7000 dwarfed the $4000 limit AAM was authorised to bid. The process was followed via Skype where AAM representatives shared their screen and one indicated if they should bid at a certain price or not. Other buyers may not attend the auction but simply indicate the maximum amount they were willing to spend and if they won, the next step; securing the car quickly before penalties set in, and shipping to Nigeria.
After more days of searching, a Mazda CX-9 was found, and it was available under what is called ‘buy now’, which meant one could buy at the listed price without waiting for it to go on a live auction. In the process of searching, this reporter observed how a Volvo XC90 with a buy now price of $2,700 ended up being sold around $2,900. This was $200 more than if the winner had seen and bought it then. However, in live auction, they could also have gotten it for less, a risk, it appears bidders have to take.
The thing about auctions is; the final price could be lower than listed or it could be higher, it all depends on how ‘bad’ those jostling for it really wanted that car. The Mazda was what was eventually bought and shipped to Nigeria.
Continues next week