Importers outsmart government on auto policy -as they resort to importation of damaged, overaged vehicles

Abiola Seun

Nigerian vehicle importers now abandoned importation of new and under aged vehicles for  importation of overaged and damaged used vehicles into the country from Europe and America, investigation has shown.

The massive importation of accidented vehicles was due to the 30 percent rebate, importers enjoyed on import duty and high customs duty on underaged vehicles due to the federal government auto policy  introduced by the Ex-President Goodluck Jonathan in 2013 which prescribed 35 percent customs duty on imported used vehicles and 35 percent levy and 35 percent duty on customs duty for new vehicles.

Since damaged vehicles get rebates, over aged vehicles pay lesser customs duty to the Nigeria Customs Service  (NCS) which however affects the revenue profile of the service.

It was gathered that for any vehicle to be considered involved in an accident and qualify for 30 percent rebate, some very important components of the vehicles such as the chassis, air bags and a large chunk of the body, must be certified damaged.

It would be  recalled that in 2010, the federal government had raised the age limit of vehicles to be imported into the country from 10 years to 15 years to curb dumping of overaged and outdated vehicles into the country.

Going by the government directive, vehicles manufactured in 2004 and below are not supposed to be cleared by the Nigeria Customs but, instead of enforcing the policy, the federal government policy, the officers of the service now allowed clearance of overaged and accidented vehicles which are not also eco-friendly into the country

However, a visit to the two biggest vehicle import terminals in Lagos; PTML Terminal and Five Star Logistics Terminal, revealed that larger percentage of vehicles exiting the terminals gates are over aged and damaged vehicles as against under aged vehicles.

Also, visit to the largest auto market in Nigeria, Berger Auto Market Apapa and vehicle marts at the Ikeja end of the Lagos -Abeokuta expressway,had shown that  50% of the vehicles displayed are overaged while larger numbers are accidented vehicles that were repaired for sale to un-suspecting buyers.

Confirming the flooding of Nigerian market with accidented vehicles, the Managing Director of PTML , Mr  Ascanio Russo in an interview last year said the quality of vehicles imported into the country has deteriorated over the last four years.

According to him, not everyone can afford vehicles due to the government auto policy that has jacked up the taxes and levies on vehicles saying that’s the reason why Nigerians resort to accidented and over aged vehicles.

“Not everybody can afford a very expensive vehicle that is why people are importing older vehicles or accident vehicles, which are clearly cheaper,” said Ascanio Russo, managing director of PTML said.

Russo further blamed auto policy that increased the duty paid on imported vehicles by over 100 percent, and said that the auto policy has made importation of vehicles into Nigeria more expensive than before.

The reality, according to Russo, is that used vehicles are not luxury, which means that people are not buying used vehicles because they prefer them to new cars, but they buy them mostly due to price
“We need cars in this economy, and this leads to people bringing in, for instance, trucks that are probably about 40-year old to reduce the impact of the auto policy, which makes it very expensive to import trucks into Nigeria. These are all economies of scale and negative externalities, which are very difficult to measure. People will look at how much it cost to reduce the level of duty,” Russo explained.

Also speaking in an interview with news men recently, the General Manager of PTML Terminal, Mr Tunde Keshinro said that the terminal is flooded with more of damaged, accidented and relatively low grade vehicles compared to what were being imported in years 2012 and 2013, which was prior to the implementation of the federal government automobile policy.

Keshinro said that importers now import low grade, salvaged vehicles, and these are equally older models rather than newer models. He said, relatively, majority of the vehicles being imported are less than 2010 as their year of manufacture.

“We expect to see newer vehicles of 2013, 2015, 2017 and 2018, and when I look at the set of vehicles coming into the country in terms of age, you would see few 2017, 2018 vehicles, they now appear to be for the super-rich and this shouldn’t be”, he noted.

Meanwhile, the Lagos Chamber of Commerce and Industry (LCCI) said that the nation’s economy has witnessed an increase in the prices of vehicles by as much as 200 to 400% in the last five years.

The chamber also said that even prosperous corporate organizations have resulted to buying fairly used vehicles for official use, due to the hike in the prices of vehicles in the country.

The Director General of LCCI, Mr. Muda Yusuf, who said this, last week in a chat with Shipping Position Daily in Lagos, also maintained that implication on operational cost is worrisome.
He said: “The economy has witnessed an increase in the price of vehicles by between 200 to 400 percent over the last five years with investors and the citizens not having the capacity to pay these outrageous prices.

Yusuf however said that from a logistics point of view, the high cost of vehicles in the country has taken a severe toll on the economy of the country, stressing that all aspects of the citizen’s economic and social lives have been negatively affected by this.

“The truth is that, the high cost of vehicles has taken a severe toll on the economy, from a logistics cost and welfare point of view. Practically all aspects of our economic and social lives had been negatively impacted by the situation. This is because over 90% of the country’s freight and human movements are done by road, which implies heavy dependence on cars, commercial buses and trucks”
Explaining further he lamented that, “manufacturers and other real sector investors suffer from high cost of delivery vehicles, sharp increases in haulage cost because of the high cost of trucks; school buses have become unaffordable by many institutions; many hospitals cannot afford ambulances; many corporate organizations have drastically cut down on their fleet.”

Effort to speak to the national Public Relations Officer of the Nigerian Customs Service (NCS), Joseph Attah on why over aged imported vehicles are cleared by officers of the service at seaports proved abortive as text message sent to him is yet yo be  replied as at the time of writing the report