According to the National Bureau of Statistics (NBS), Nigerians spend an average of N1.08 trillion ($1.9 billion) per annum importing used cars from Europe, Asia, and the Americas. Now, that’s a lot of money! And it speaks to the immense opportunities that are inherent in the car importation business. Across the African continent, there’s a huge demand for second-hand cars. This has been the case for many decades, mainly due to the prevalent economic situation on the continent which makes it difficult for most people to afford brand new cars. This, by the way, is not to say that Africans do not buy brand new cars because they do.
The incredibly huge demand for second-hand cars in Africa has led to the establishment of companies like Cars2Africa, Cars45, AutoPedigree and most recently, AutoCheck, etc. All these companies, and many others like them, specialize in trading on used cars.
To gain insider knowledge about how the used-car importation business works, Business Elites Africa spoke with Lucas Ojukoko. The Lagos-based car dealer has been importing and selling used cars for nearly ten years. But before starting his company (Nomie Autos) in 2014, he spent time working as an auto dealership agent during which time he learnt so much about how the business really works. This, he said, is the best way to start.
“I started as an agent. All I had then was my phone and the zeal to make it as a car salesman. So, I went from one car shop to the other, taking pictures of the cars and helping with the marketing. For every car sold, I was paid my agent fee. That’s how I was able to gather money and experience before starting my own auto dealership in 2014,” Mr Ojukoko said.
How exactly does the car importation business work?
According to Lucas Ojukoko, the first step in the car importation business is participating in car auctions. However, before you can participate in a car auction, you must be registered under an international car dealership company such as Car Max. You will also need to have a domiciliary account in order to facilitate payments. Now, at the end of every bidding process, only the highest bidder gets to buy the car. Of course, buying the car means that you will pay those selling it. You will also “pay the shipping fees so they can ship it to your country, in this case, Nigeria. When it gets to the Nigerian port, you pay all the necessary custom duty. And the interesting thing is that the newer the car the more the duty. And after the payment and subsequent clearance processes, the car becomes yours.”
It is also important to note that you are not allowed to sell imported cars in Nigeria without the authorization to do so. And what this means, is that you need to have the necessary permits. According to Mr Ojukoko, the first step to obtaining a car dealership permit is to register your company with the Corporate Affairs Commission. Afterwards, you will approach the licensing department in the Federal Ministry of Transportation where you must submit your company’s registration details, two passport photos, a means of identification, and a fee of N130, 000. After fulfilling these conditions, they will issue you a dealership certificate and a dealer’s plate number.
How risky and profitable is the business?
EDITOR’S NOTE: Continue with the rest of the interview on page 80 of our 20 Trending and most Profitable Businesses in 2021 edition. Click here to read it.