How to start buying and selling Cars in Nigeria is a good business any one can do, because Nigeria has a large population with purchasing power.
Secondly, the different ways we use Cars in modern homes show that they are necessary and not luxuries.
In this article, you will learn how to import Cars, clear and sell them for profit to enable you start your own Car selling business.
Okay, enough talk. Let us see how you can start this business.
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.
See the The 10 Cheapest New Cars in Nigeria and Prices
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
See: How to Start Mini Importation in Nigeria
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.
See Also: How to Start Importation Business in Nigeria with Only N,5000 Naira or Less
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.
What is PAAR and RAR, let us find out.
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.
See Also: 7 Places to Buy Cheap Cars in Nigeria for Car Selling Business or Personal Use
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.
How do you pay for the car in a secure way?
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.
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.
See Also: The 10 Cheapest New Cars in Nigeria and Prices
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
- Importer gets a Cargo arrival notice from the Shipping Company, and obtains Original Bill of Lading from Authorized Dealer bank.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
For detailed process for importation of goods into Nigeria, download this general comprehensive circular prepared by Central Bank of Nigeria at www.customs.gov.ng/Guidelines/Destination_Inspection/index.php to learn more.
If you want to get the exact import duty for your specific Car, visit Nigeria Customs Service website at https://www.customs.gov.ng/Tariff/sections.php and see Section xvii, Chapter 87 dealing with Motor Vehicles.
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.
How to start buying and selling Cars in Nigeria is easy as you can see.
All you have to do is buy through a relative or Agent abroad from Auctions, buy direct through Car Trading Companies on the Internet or appoint Shipping Clearing and Importing Agent in Nigeria, to buy the specific Car you need.
You can start this business without any Capital and sell Cars to ready buyers, so what are you waiting for. Now that you know how to start buying and selling Cars, take up the challenge and start the business today.Buy and Sell Bitcoin in Nigeria - Register for free on Luno
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