Hurricane Ida wreaked havoc in the United States a few weeks ago, destroying approximately 350,000 automobiles. The hurricane is expected to increase auto costs, and some of the damaged vehicles could be rebuilt or sold as fairly used to other countries.
According to some analysts and car dealers, many of these vehicles will be auctioned off and shipped to Nigeria in a matter of weeks as the country has a huge appetite for used vehicles from the United States.
Nigeria imported used automobiles (commonly known as “Tokunbo” vehicles) worth N311.63 billion in the first quarter of 2021. Since the start of the year (2021), according to data from the National Office statistics (NBS), used vehicles worth N601.51 billion were shipped to Nigeria from foreign countries, making Tokunbo vehicles the third most expensive item on Nigeria’s import list . Of this figure, 140.2 billion naira was spent on importing used vehicles from the United States in the first quarter of 2021, while 33.78 billion naira was spent on the same in the second quarter of This year.
On August 29, Hurricane Ida struck the northern Gulf Coast, making landfall near Port Fourchon, Louisiana. Flooding in northeast Louisiana killed dozens of people and caused severe property damage, including the destruction of thousands of vehicles on the road and at dealerships. The floods destroyed around 350,000 vehicles.
According to research, automobiles damaged by flooding could re-enter the market after repairs and re-inspections. However, since these automobiles are frequently “transported far beyond their home territory” to areas where customers are less likely to know what to look for, the history of flood damage may not be revealed. to buyers.
Flood damaged cars arrive in Nigeria
Nairametrics spoke to Mr. Phillips Adeyemi, a car dealership, who said: “A vehicle that has been inundated by a hurricane as severe as Hurricane Ida is practically deteriorating from the inside out. These cars are taken to auctions or salvage yards in the United States, where vehicles are scrapped and parts that are not damaged are collected. Yes, most of them will be shipped to African countries especially Nigeria where we have a big appetite for American automobiles.
Another car dealer who chose anonymity said Nigeria has long been an important market for used vehicles from the United States. These damaged cars can now be found in the country. They are generally repaired and classified as salvage cars. They will then be auctioned, shipped to Nigeria, and sold to unsuspecting buyers for the same price as undamaged vehicles.
“Before importing a vehicle into the country, there are several factors that we consider but most of the time it’s based on our client’s specifications. Clean and damage-free cars are more expensive than damaged cars ”, he added.
Another merchant, Benjamin Ikhide, said: “People are looking for discounts on social media or at vehicle auctions as the used car market grows. However, you could end up with a vehicle damaged by flooding, which could cause major problems down the road. A car with pre-existing water damage can be difficult to spot, especially if the dealership has gone to great lengths to clean it. People should either avoid buying cars on social media or test them thoroughly before paying for them. “
How do you know if a vehicle has been damaged by a flood?
Babasola Oyeleye is a car enthusiast and car dealer who runs the Nigerian end of Tokunboh Cars Naija. He told Nairametrics that flood damaged vehicles are difficult to identify with a simple physical inspection, as dealerships usually go to great lengths to clean and refurbish them. However, buyers can perform a VIN (Vehicle Identification Number) check on a vehicle they intend to purchase.
“There are websites and apps where a buyer can run a vehicle’s VIN number to check its history, although the service costs money. These apps and websites provide you with all the data about a vehicle, whether or not it has been “crashed” or not, whether it has been damaged by flooding, and so on. VIN verification is the easiest, fastest and most reliable way to identify flood damaged vehicles. , “ he said.
What you should know
The cost of used vehicles has been on the rise for some time in the United States due to a number of factors including a shortage of chips. Chips are vital in automotive production because they power everything from sensors to power steering brakes and more. Toyota, for example, planned to cut global vehicle production by 40% in September due to the global shortage of microchips.
In Nigeria, the cost of Tokunbo and even Nigerian used vehicles is increasing alarmingly for totally different reasons. Besides the cascading effect of the rising cost of used vehicles overseas, Nigeria’s exchange rate problem, which has worsened over the past two months, has seen the naira trade for the dollar at rates as high as N575 / $ 1 to black. market although the exchange rate was still averaging N413 / $ 1 at the official window.
The inability of many import-based companies to access forex in banks has forced these entrepreneurs to seek out the greenback on the black market to keep their businesses operating. In turn, this increases the pressure of demand in the parallel market and drives up the exchange rate.
The result? A rise in the price of all imported things including Tokunbo vehicles!