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In Nigeria, Used Cars Are a Road to Status

In Nigeria, Used Cars Are a Road to Status


LAGOS, Nigeria—In a dust-blown lot, Moeshack Alele approaches a cluster of sport-utility vehicles, not quite ready to spend five years of his savings and borrow from family for a used car.

But along comes dealer Udeagha Oliver saying Nissan Pathfinders have “been selling like crayfish” (the local equivalent for hot cakes).

Mr. Alele, a judicial clerk, agrees to pay $12,000 for a 2003 model from the U.S. and takes off to get the cash. Though shipping, tax and customs have pushed the price well higher than it would be in the U.S., in Lagos this is a deal.

Mr. Alele is typical of Nigeria’s new consumers, eager to find alternatives to perilous minibuses and motorcycle taxis by purchasing their own cars.

The World Bank predicts the number of middle-class Africans, those whose incomes exceed their basic needs, will rise to 43 million by 2030 from 13 million in 2000. That growth extends to Nigeria, the continent’s most populous nation and a budding economic powerhouse.

But in a nation where per capita income is about $2,700 a year, most Nigerians still opt for used cars, making the same sort of transition from subsistence earning to consumer spending that plays out across Africa’s developing economies.
In Nigeria, even preowned cars take on the gloss of status symbol and have developed nicknames. The 2000 Honda Accord is widely known as “Baby Boy.” The flashy 2003 Accord earned the sobriquet “End of Discussion.” Then came the redesigned, equally impressive 2007 Accord: “The Discussion Continues.”

Imports of small, inexpensive new cars from India and China have increased in several African countries in recent years, mainly in South Africa. But in Nigeria these companies are only starting to enter the market. China’s Chery Automobile Co. has five showrooms in Nigeria, and China’s Geely Automobile Holdings Ltd. GELYY 3.19% and India’s Tata Motors Ltd. also have begun selling cars here. Nigerian used-car dealers say they expect new cars from China to be serious competition within five years but that used cars from the U.S. still dominate the market.

Used-car figures aren’t officially tracked, but the Nigeria unit of the Toyota Motor Corp. estimates that 155,000 used cars of all makes were imported into the country in 2008. That’s about twice what new-car sales were before the financial crisis socked sales in 2009, according to research firm Business Monitor International Ltd.

“In the last several years we have seen a dramatic increase in opportunity from West Africa…and I don’t see that trend reversing,” says Dan Oscarson a vice president for Illinois-based Insurance Auto Auctions, which sells damaged cars at auctions to U.S. and international buyers. He declines to provide sales figures.

But major car makers that sell new cars in Nigeria have stayed away from selling previously owned vehicles. “Eventually, we expect to be involved in the used-car market, but there’s a lot of wheeling and dealing there,” says C.K. Thampy, the managing director of Toyota Nigeria Ltd. “A lot of it is possible only in informal channels.…We can’t play ball with those guys.”

That suits used-cars dealers like Metche Nnadiekwe. He is president of the dealers association at the Berger Auto Market, a sprawling complex of some 30,000 cars considered by dealers as the biggest used-car market in West Africa. Clad in a blue-striped shirt and black Stetson, Mr. Nnadiekwe says there are around 5,000 dealers at Berger market, where the most successful dealers sell about 60 to 80 vehicles a month. “The high and mighty come, but regular people also come to buy cars and get on the road,” he says.

Most of the cars come from dealers in Texas and New Jersey, with whom Nigerian dealers have built up relationships. A shortage of used cars in the U.S. during the recession wasn’t a problem in Nigeria, in part because it coincided with a drop in demand here and because most of the cars sold here are older and in worse condition than what sell in the U.S.

About 50,000 vehicles valued above $2,000 were exported to Nigeria from the U.S. in 2008, based on various official sources compiled by Export Trader. The Toronto-based vehicle-export company says exports dropped sharply in 2009 because of the global recession and other factors but have started creeping up.

“Nigerians mainly import low-end, eight- to 10-year-old vehicles valued below $5,000,” says Vadym Kozub, director of development for Export Trader. He says flooded, damaged and stolen cars often are imported, but that the Nigerian government and U.S. and Canadian organizations have taken steps to make the process more transparent.

Mr. Nnadiekwe and other Nigerian dealers acknowledge that many of the cars they buy from auctions have damage but deny that vehicles are stolen.

Prices at the Berger market are widely considered among the lowest in the country. But buying there can be exhausting.

On a recent visit, a woman carrying a large orange purse combs the lots selling counterfeit license plates to car buyers eager to avoid the bureaucratic hurdles of legitimate car registration. Young salesmen seeking buyers dart between vehicles parked on every inch of available space.

Under a highway overpass, dealer Patrick Landfree grabs a prospective customer by the elbow and drags him across three lots, past a lunch counter’s row of stockpots and across an open sewer to put him in a 2003 Toyota 4Runner.

The customer, orthopedist Michael Obikamye, notices a crack in the windshield.

“Oh that’s a small thing, a minor problem,” Mr. Landfree explains. “Some kids threw a rock from the overpass.”

The doctor appears skeptical and moves to a 2003 Toyota Highlander with California plates and U.S. Marine Corps sticker.

“The Berger market is like a cattle market,” says Richard Shittu, who once dealt in used cars but now sells only new vehicles, from Toyota, Nissan Motor Co. , Honda Motor Co. HMC 0.50% and Kia Motors Corp. “It’s too hectic. You need a lot of hustlers and hagglers. It’s a headache.”

When Mr. Alele, the judicial clerk, returns to the market after withdrawing cash, he plunks down $12,000 for his Pathfinder. It’s more than he wanted to spend—he makes about $600 a month—but he has little choice.

“I would have taken something smaller, but the roads are so bad in my area,” Mr. Alele says. “I need something that can gallop over the potholes.”

Writer: Will Connors
Published: January 18, 2011
Photo Credit: The Vangaurd


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