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Today you must not have a dealership company to import your car to Nigeria.

How Much Do I Need Start A Car Importation Business : Buying and Selling Cars Business In Nigeria



Whether you are a first-time or regular vehicle importer in Nigeria, following the market trends become very important to make a decision. The auto market fluctuates such that even experienced car importers need a constant flow of information to keep track of the latest changes in this sector, but with today’s media and devices, finding a vehicle online within or outside the country at an affordable price is now easy. Meanwhile, to use a car import service that knows how to manage the processes effectively would make life easier for the importer.



How To Buy And Import Cars From Europe To Nigeria

Whether you are a first-time or regular vehicle importer in Nigeria, following the market trends become very important to make a decision. The auto market fluctuates such that even experienced car importers need a constant flow of information to keep track of the latest changes in this sector, but with today’s media and devices, finding a vehicle online within or outside the country at an affordable price is now easy. Meanwhile, to use a car import service that knows how to manage the processes effectively would make life easier for the importer.

Auto Importer Or Not - You Can Import Your Cars Direct From Europe

Today you must not have a dealership company to import your car to Nigeria. You can use the same source as most car dealers. When you find a vehicle in Nigeria, I guess you may have many stress-free chances to get to the location of the car and buy it, but what if it is located, for instance in Europe? Will you process your visa and buy a flight ticket to travel - to buy it? Well, if you have several reasons to travel to Europe, then it is worth it. Here are some tips you will need:

Knowing Exactly The Vehicle You Want To Buy And Import

Experience has shown that 50 percent of buyers we interviewed are not sure of the vehicle they want to buy. Knowing exactly the type of vehicle to buy gives you more control in the negotiation with the auto dealers. The dealership marketing strategy seems to be similar worldwide. First, they will check to know your level of experience in the business and then try to get the insight if you know the vehicle you want to buy then fix a price for you. Research the car you want to buy, the engine and features it must have before going to the dealers. It gives you the confidence to demonstrate that you know exactly the vehicle you are looking for. Make compare and let them know that you have found it in another place will likely - in most cases - push them in a competitive mode. That way - you have more chances to negotiate and get a better deal.

Transporting The Vehicle From Where You Bought It To A Shipping Agent

It is advisable to get a shipping agent first, then look for a vehicle within the area. Why? Well, to find a car not far from your shipping agent can reduce its transportation fare and since most used vehicles mounted for sale in Europe are unregistered. It is also prohibited risky to park an unregistered vehicle along the street. Once you have informed a shipping agent that you are bringing a car, he or she will prepare a space for you to park it.

To drive an unregistered vehicle in Europe, you need a seasonally registered or dealer’s plate number. If you cannot get any of them, better options are to use a transporter or trailer to carry your car to a shipping agent. The process of getting a number and the amount charged for it is not covered here. The best and most flexible solution is to use a transporter. You won’t like a situation where the vehicle breakdown on the way and you will still call an auto transporter to come and pick it up and they will even charge you.

How much does a transport company charge for the car?

They usually charged 1 Euro per Kilometer for small cars below 1.3 ton. However, any vehicle that is above this weight – for example, Multi-Purpose Vehicle (MPV) or Sports Utility Vehicle (SUV) the cost of transportation is likely to be higher. But don’t settle for this price - it is negotiable. Ask for a discount sometimes you may get up to 5 - 10 percent discount as of the time of this writing.

Is it necessary for me to go with the transport company to pick the vehicle?

If you don’t have any hindrance - going with the transporter should be the best option, since you are the person buying the car. Your presence is vital to see the vehicle before payment. Despite concluding the price of the vehicle on the telephone with the dealer, you still have the chance to restart a negotiation while you are there and get more discount. It depends on your ability to negotiate.

Pay more attention to the following when negotiating:

Is the condition of the car the same as you were told on the telephone or described in email?
Has the dealer revealed the complete history he or she knows about the vehicle to you?
Buying a damaged car: What will be the cost to fix the damage?
After adding the cost of repairing the damage to the total price, will the total cost exceed the price of a similar vehicle in good condition?
Can you get the same vehicle closer to your shipping agent to reduce the cost of transportation?

What if you get to the dealership and the vehicle is not as described?

Well, it sometimes happens that for one reason or the other there was a misunderstanding or purposely uncover information about the vehicle you want to buy. In this case, the question should be, how big is this difference between what you know about the vehicle before going to the dealership and what you see when you got there? You must not buy the vehicle if there is an unbearable difference. However, I could show you some options to help you make a better decision in the situation.

1. Option – Acceptable difference: Restart the negotiation with the auto dealer base on the vital fact that the vehicle’s condition is different from what you were told before you start coming.

2. Option – Hard To Accept difference: Consider looking for another vehicle within or outside the dealership if there is no way to get the price of it down enough to cover the amount you will need to fix it.

3. Option – Unbearable difference: In the worst case, it is in your hand to know if you would want to leave the dealership entirely for the bridge of trust or look further around the area for the same or alternative vehicle. In any case, don’t go with what is not acceptable to you.

To lose money for transportation is sometimes better than to settle for a deal that the disadvantage will uncover itself later and the cost of fix it becomes more expensive. In Europe, some laws cover you as an auto buyer but it is not within the scope of this article.

Where To Find Cheap Used Cars For Export In Europe?

The best places to find cheap used cars in Europe for export are online platforms for second-hand vehicles because many companies into such businesses are represented online today. Either through their website or they have business profiles attached to a classified auto platform.

Buying Affordable German Second Hand Export Cars Via Auto Brokers

There are so-called auto brokers that actively search for cars and negotiate their prices to suit the budget of their customers. Car dealers usually get trade-ins that may not fit into their business concept and they would likely want to sell the unmatched vehicle as quick as possible.

As you can see, you have different ways to buy a vehicle cheaper from a regular auto dealer. They usually have some cars accepted in part payment for another, which can be affordable in price. Buying cars in Europe comes with advantages but there are things to consider while doing so.

Depending on the quality of the vehicle you wish for export, checking the following things may undoubtedly help you to calculate and make compares to the cars you choose. It is essential, especially when you want to buy online.

1. Do I need a car with an evaluation report?
2. Must it be a German used car?
3. Can the pre-owned vehicle have slight damage?
4. Where is the location of the car in Europe?
5. Finally, what is your ability to bargain with auto dealers?

While the above could help you find the car suitable for your needs, we could go further to explore some other ways that will even enable you to buy expensive cars for export at an affordable price in Europe.

5 Ways To Buy Expensive Cars For Export Cheaper in Europe

And that is you look for vehicles...

1. with a slightly damaged accident
2. without roadworthiness (TÜV)
3. the mileages are over 200 000km
4. that have suspension damage
5. with the issue of brake system
The motor vehicle damages above can quickly and affordably be fixed outside Europe - mainly when exporting to Africa.

Is there a Market for Imported Cars?

I started by telling you Nigeria has a large population. If we use that as a basis the market for Cars exists.
In addition, Nigeria does not manufacture Cars hence we import all the Cars we use, except for a few assembled locally and those Innoson Motors is fabricating at Nnewi in Anambra State.

Buying and Selling Cars – Do a Market survey

To begin this business, do enough research to find out the kind of Cars Nigerians love, buy and use.
This one is easy to do. Just become a traffic warden for a day in the central business districts of your city, with a pen and a note-book and count the different brand of Cars that would pass in an hour.

After a while, you will discover the most popular and the second brand people prefer.
To verify your findings, carry out a sample survey of different sections of the society made up of Teenagers, Adults, Entrepreneurs, Employed people in Public and Private Enterprises, Traders, Artisans, Farmers, etc and ask them the brand of Cars they prefer and why, to get a clear choice of the two types of Cars you can start importing.

What Are the Brand of Cars People Love?

As you do market survey for how to start buying and selling Cars in Nigeria, what should concern you is to find out the brand of Cars people love, and wish they had, and sell it to them.

From Survey, I have discovered that Nigerians love Japanese cars such as Toyota and Honda Cars.
For Toyota Cars you have Toyota Sienna, Camry, Big Daddy, Envelope, etc.
For Honda Cars, you have End of Discussion, Honda Baby Boy, Honda Ala and Bullet.
For high-end Cars, they prefer Mercedes-Benz, BMW, Range Rover Sport and Ford.

Why Do People Buy Cars?

To build a profitable business importing cars, ask yourself this question. Why do people buy Cars?
People get Cars for different reasons but mostly for comfort, transportation, for moving goods, for prestige, due to easy access to spare parts, because they are strong models, fuel economy, because they are easy to repair and for pure luxury.

How to Source Cars Cheaply For Importation

You can buy direct from online Car Dealers Websites, e-bay Auctions, Auto Auctions, Yahoo Autos, etc. Use their Websites to get the exact amount it will cost to buy and Ship Cars to Nigeria.

What are the Costs You Pay to Import Cars into Nigeria?

As you think about how to start buying and selling Cars in Nigeria, note that the costs you pay to import Cars will decide how profitable the business turns out.

Secondly, the costs for importing Cars into the country differ according to the brand of Car, year of manufacture, model and engine size.
The costs you will incur from country of origin to Nigeria for importing Cars include:

• auction fee if you buy through an Auction process abroad
• shipping cost of Car to Nigeria payable to the foreign country
• clearing and port charges
• custom duty, custom levy, and VAT
• commission payable to Shipping and Clearing agents
• charges you will pay to the Shipping Company at delivery point
• miscellaneous expenses

Rules for Importing Goods into Nigeria

The Nigerian government insists that to import goods into the country you must first open e-Form M.
Secondly, e-Form M is valid for 6 months except for the one you open for importing plants and machinery which is valid for 1 year.
Thirdly, you should mark supporting documents as Valid for Forex or Not Valid for Forex remittance.
Fourthly, all applications for goods subject to destination inspection shall carry a prefix “BA” to the Form M, and those exempted from destination inspection “CB”.
In addition, “Any person intending to import physical goods into Nigeria shall in the first instance process the e-Form M through any Authorized Dealer Bank irrespective of value and whether or not payment is involved”

Nigerian Import Duty and Levy

As you start your Car buying and selling journey, note that importation of new and used Cars attracts Import Duty and Levy. Duty increased from 20% to 35% while Import Levy has gone up from 2% to 35% making a total of 70%.

Car Importation Process – How to Import Cars in Nigeria

Your importation of that Car starts here. Go to your bank and open an e-Form M.
Note that there is prohibition from importing used Cars manufactured more than 15 years ago. This means you can only import Cars that are fifteen years or less.

Requirements for opening e-Form M.

Documents Needed for Getting the e-Form M in Nigeria
Submit these documents to an Authorized Dealer Bank for processing. They are:

• registration of business name and certificate of incorporation
• tax clearance certificate
• tax identification number (TIN)
• registration with Federal Inland Revenue Service
• valid email address linked to your Tin number
• authorized dealer bank to process the e-Form M

When you present these documents, the bank will process it to find out whether they are complete, authentic, meet the set standards, to enable them accept and open the Form M or reject it and return it to you for rectification.
If the bank accepts your Form M application, they will send it to the Scanning Service Provider and the Nigerian Customs Service for approval with the following documents: Pro-forma Invoice, NAFDAC and SONCAP Certificates were applicable, etc.
After checking, if the Nigeria Customs Service accepts it, they will approve the e-Form M. With this approval, the Importer can apply on the Nigeria Single Window for Trade for Nigeria Customs Service to issue PAAR.
In addition, if payment is by Letter of Credit the importer will get the foreign exchange through his bank and tell the Seller to start shipment of goods.

Inform Seller to Start Shipment of Car

Once Importer gets approval for the e-Form M, you can instruct your Agent or Seller to start shipment of the Car to the port of destination in the e-Form M.
To start the shipment by the Seller, the Importer will send the exporter a copy of the approved Form M.
The Seller will send this Form M, plus Final Invoice, Bill of Lading and the Packing list to COTECNA the International Accreditation Firm for issuance of the SONCAP Certificate.

How to Get SONCAP Certification

Importers in Nigeria need SONCAP certificate to clear their goods. There are two types of SONCAP certification. They are Product Certificate and Certificate of Conformity called the SONCAP Certificate.

SONCAP certification is for manufacturers and producers who Export to Nigeria. This shipment verification shows an acceptable level of compliance of exporter for goods regulated under SONCAP program.

What the Seller (Exporter) need to do, is apply for SONCAP certification online through COTECNA website.
There are three certification processes for SONCAP. They are:
Route A is for unregistered products and for infrequent exporters
Route B is for regular shipments and those with acceptable level of compliance under Route A.
Route C is for regular shipments with excellent level of compliance under Route B.
All imports of new and used Cars should have SONCAP certification so make sure the Seller is aware of this import condition in Nigeria.

Pre Import Clearance – How to Clear your Imported Car

Once the Nigeria Customs approves the e-Form M, the Importer should activate the SONCAP certificate and apply on the Nigeria Single Window for Trade for Nigeria Customs Service to issue PAAR.

Importer should also get Risk Assessment Report (RAR) because they need it with Pre-arrival Assessment Report (PAAR) for pre-import clearance.

Pre-Arrival Assessment Report (PAAR)

Pre-Arrival Assessment Report (PAAR) is an online application developed by the Nigeria Customs Service to generate this report.

How this works is that after an Authorized Dealer Bank has reviewed the e-Form M application with all pre-import documents and Accepts application, they will send it to Nigeria Customs Service (NCS) for further processing, approval and registration of Form M in the Nigeria Single Window for Trade.

For NCS to accept and register the Form M in the Nigeria Single Window for Trade, first the bank must accept it and send application with these supporting Final Import documents such as, Combined Certificate of Value and Origin (CCVO) Clean/Shipped on Board Bill of Lading, and Packing List which they received from the Sellers Bank.
If NCS confirms that the documents are genuine, they will generate the Pre-Arrival Assessment Report which is for clearance of goods in Nigerian ports.

Risk Assessment Report (RAR)

Authorized Dealer Bank sends copies of Combined Certificate of Value and Origin, copy of Bill of Lading and Final invoice received from the Sellers’ bank to Risk Management and Scanning Service providers such as COTECNA to compile the Risk Assessment Report (RAR) for the Nigeria Customs Service.

COTECNA checks to make sure Seller (exporter) complied with all documentation required before approving shipment. RAR helps Customs to clear goods such as heavy-duty machines, equipment, and Containers easily.

Required Documents for Importation of Goods into Nigeria

All imports into the country must come with the following documents:

Completed Form ‘M’ submitted to Authorized Dealer Bank should have detailed information such as Description of goods, Port destination, Shipment Identification, Date of Shipment, Country of origin, Country of Supply, Packing List, Bill of Lading/Airway Bill/Road Way Bill, SONCAP Certificate, Manufacturers Certificate of Production, NAFDAC Certificate, Laboratory Certificates for foods, Chemicals, Electrical parts and Pharmaceuticals, Pro-forma Invoice, Local Insurance, etc.

What Are the Options for Importing Cars into the Country?

There are many options for importing Cars into the country. Choose the option that works for you as you learn how to start buying and selling Cars.

The three best options are as follows:
Option 1: Get a representative based in a foreign country – USA or Canada to act as your agent. This person could be a close relative or a highly trusted friend.
Option 2: Hire Import Shipping and Clearing Agent or Company in Nigeria to Import the Car brand and specification you wish to buy.
Option 3: Buy direct from Car Dealers online and pay for them to Ship it to you in Nigeria.

Car Import Purchase Decisions

You have done your research on the internet and found the Car you want, downloaded the picture and sent it to your agent or emailed your choice to the Seller.

You may choose to bid in an Auction, or buy direct from the Dealers’ Website or through appointed Nigerian Import Shipping and Clearing Agents.
Your Agent pays the Auction fee to take part in the bidding process, bids and wins a good brand and model with low mileage, with leather or cloth seats, global positioning system and other gadgets.

Secure Payment Terms

The next thing to do is to arrange for payment and shipment to Nigeria.
The secure payment options available are wire transfers, credit or debit Card from your bank to the Sellers’ bank or other payment methods.

However, the most secure method is Letter of Credit.
In Letter of Credit the Importer pays for cost of the Car to the Authorized Dealer Bank (i.e. the Issuing bank) for transfer to its Correspondent bank in the Sellers’ country. The Correspondent bank will credit Sellers bank with this money, if Seller performs agreed actions in line with the terms of the Letter of Credit.
In Bill for Collection, you hand over Documents against payment or make payment at a specific future date. Parties follow terms of the agreement to get money and receive Car.

Transport Method

How to start buying and selling Cars involves deciding whether to use Ship or Air Freight to transport the Car.
Allow the Seller to Ship the Car either by RO- RO (i.e. roll on roll off) that means the Shipper will drive your Car inside a special Ship made for Carrying Cars and at destination, drive it down too, or in a 20 by 40 feet Container to Apapa, Tin Can Island, Onne or Kano ports, etc.

Please note that it is cheaper to ship your Car by container through the Sellers’ assistance so that you pay for only one-third of the cost of the container which could carry two mid-sized Cars and a Sport-utility Vehicle.
Another advantage for using Container to ship your Car is that you can safely load the Car with goods you can resell in Nigeria.

How Many Days does it take to carry Imported Car into Nigeria from Foreign Ports?

From the day the ship sails from USA or other country of export, barring any accidents, it takes about 45 to 65 days for the Car you import to reach the port of destination in Nigeria.

Upon the Ships arrival, you will receive a Cargo Arrival Notice from the Shipping Company, who also sends the Ships Manifest and the Master Delivery Order to the Operations Department of Nigeria Ports Authority.
Now the Car has arrived Lagos RORO or Apapa Port. To clear the Car, follow this guide.
Procedure for Clearing Car After It Lands In Nigeria

1. Importer gets a Cargo arrival notice from the Shipping Company, and obtains Original Bill of Lading from Authorized Dealer bank.

2. Importer fills Single Goods Declaration Form (SGD) to declare goods imported to the Nigeria Customs Service (NCS), and submits Form for assessment of duty payable. NCS will use Cost Insurance and Freight (CIF) value of goods and rate of exchange on the approved Form M to compute duty.

3. NCS computes other charges such as 1% of Free On Board (FOB) value of import based on the rate of exchange on the approved Form M, VAT, Levy, and assessed duty, for the importer to pay to Authorized Dealer Bank and get receipts.

4. Importer uses SGD form as part of documents for registering the Bill of Entry with NCS. Collects endorsed copy of Bill of Entry to process release of Car and goes to the Shipping Company with original Bill of Lading collected from his bankers and the Customs Bill of Entry to process release of the Car.

5. Shipping Company checks Bill of Lading and gives importer Goods Release Form to fill. Importer fills the Form and pays some fees to the Shipping Company before they will send the Master Delivery Order to the Commercial section of Container Terminal Department of NPA, and then give importer a Terminal Delivery Order (TDO) to hand over to Nigeria Ports Authority (NPA) for release of Container.

6. Importer submits TDO to Container Terminal Department of NPA, signs off on it, and goes to the Delivery Point with his Driver to wait for the Container. NPA staff gives Importer exit pass.

7. Importer and Driver leave the ports driving the Car or transporting the Container in a Truck if it has more than one Car.

If you hire Import Shipping and Clearing Company or Agent, or buy direct through Car Dealer Websites, you will follow these same procedure to clear the Car in Nigeria. So to make the clearing processes seamless, hire reputable shipping and clearing company or Agent.

Submit These Documents after Clearance of Goods

You should send these documents after clearing of the car to the Authorized Dealer Bank for completion and record purposes.

• Risk Assessment Report (RAR) with the Form M number.
• Single Goods Declaration (SGD) Form completed signed by importer or his Agent.
• Combined Certificate of Value and Origin (CCVO)
• Copy of packing list
• Import Duty payment receipt with SGD number stated on it
• Copy of certified Manufacturer’s Certificate
• Copy of Shipper’s Certificate

Profit from Sale of One Car

How to start buying and selling Cars in Nigeria is profitable if you can manage the costs and Taxes well. Therefore, to compute the profit, total all the costs items less sales price of the Car in Nigeria.

From research, you will earn a minimum profit of about N100,000 to N250,000 depending on the amount you eventually sell the imported vehicle. Based on this premise, Car importation business is profitable.
Just make sure you clear the Car quickly so that you do not pay demurrage to the Shipping Company.
Sell it early so you don’t incur extra costs for Ads, display, fueling and costs for keeping it in a good state before sale.
To avoid extra costs, get buyers for the Cars before you start the importation process. If you do, you could use the buyers’ money to import the Car, pay for import duty and port charges, and then keep the profit for yourself.

Click here to get the complete guide on the above business plan  Click Here

Uses of this Business Plan (PDF and Word)

This business plan can be used for many purposes including:

•    Raising capital from investors/friends/relatives
•    Applying for a bank loan
•    Start-up guide to launch your business
•    As a business proposal
•    Assessing profitability of the business
•    Finding a business partner
•    Assessing the initial start-up costs so that you know how much to save
•   Manual for current business owners to help in business and strategy formulation

Contents of this Business Plan (PDF and Word)

This business plan include:

•    Marketing Strategy
•    Financial Statements (monthly cash flow projections, income statements, cash flow statements, balance sheets, break even analysis, payback period analysis, start-up costs, financial graphs, revenue and expenses, Bank Loan Amortization)
•    Industry Analysis
•    Market Analysis
•    Risk Analysis
•    SWOT & PEST Analysis
•    Operational Requirements
•    Operational Strategy
•    Why some people in this business fail, so that you can avoid their mistakes
•    Ways to raise capital to start your business

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Oyibo E. Moses8 Posts

Whether you are a first-time or regular vehicle importer in Nigeria, following the market trends become very important to make a decision. The auto market fluctuates such that even experienced car importers need a constant flow of information to keep track of the latest changes in this sector, but with today’s media and devices, finding a vehicle online within or outside the country at an affordable price is now easy. Meanwhile, to use a car import service that knows how to manage the processes effectively would make life easier for the importer.

3 Comments

  • Terry Reply

    21 Dec 2019 at 11:12 pm

    Thanks for the information, now I know how car dealers make their millions from

  • Oyibo E. Moses Reply

    23 Dec 2019 at 11:08 am

    Thanks for your Comment

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