Jitters in Auto Sector over North Atlantic Hurricanes

Weeks after Hurricanes Harvey and Irma wreaked havoc on some parts of the United States, stakeholders in the Nigerian automobile industry have expressed fear that Nigeria may become the dumping ground for the flood-damaged vehicles if measures are not put in place to check the likely influx. Raheem Akingbolu reports

Within the last days of August and the early days of September 2017, the world held its breath as violent tropical storm; Hurricane Harvey and Irma, wreaked havoc across Eastern Texas in United States of America as well as North Eastern Caribbean and Some parts of Florida. The natural disaster, which is believed to be an extremely destructive Atlantic hurricane, had within a four-day period impacted negatively on the areas affected. According to reports, many areas received more than 40 inches of rain as the system meandered over eastern Texas and adjacent waters, causing catastrophic flooding.

With the blame game going on between US government and various interest groups, stakeholders in the Nigeria’s automobile industry have raised alarm that the problem may impact negatively on the industry.   Though Hurricane Harvey destroyed hundreds of thousands of houses, billions of dollars-worth of property including an estimated 40 lives, industry watchers believe that the one that will have direct impact on Nigeria is the hundreds of thousands of vehicles damaged by the flood.

‘’You may be wondering, what has this to do to with the automotive industry in Nigeria’’, Simon Ekom, a consumer advocate based in Oregun, Lagos had opened a discussion on the subject during a recent forum in Lagos. ‘’It will shock Nigerians that in the next few months, our markets will be bombarded with flood-damaged cars,’’ he said.

Facts and figures

The activist, who quoted Fortune magazine, as stating that over 100,000 insurance claims for cars impacted by Harvey have already been filed, with the number of claims expected to rise, added that others have estimated that Harvey had destroyed up to five times more.

‘’For instance, Cox Automotive chief economist Jonathan Smoke told USA Today he believes 300,000 to 500,000 vehicles were destroyed by Harvey’s path. This has serious implications for Nigeria’s automotive industry. Nigeria’s auto industry depends on imports from overseas. More than 70% of these vehicle imports, according to Nigeria Bureau of Statistics, come from United States of America,”

Meanwhile, a recent report released by PricewaterhouseCooper (PwC), stated that in 2016, 450,000 vehicles were imported into Nigeria from US, according US Census Bureau.  To this end, Nigeria’s professional services firm, has however pointed out that one important thing to note about these statistics is that more than 70per cent of these imports are used cars, also known as tokunbo.

According to PwC, American Specs, Toyota and Honda dominate the tokunbo car market in Nigeria as they satisfy the criteria of price, durability and resale value.

Speaking on this development in an interview with THISDAY, an auto industry analyst, Mr. Fadare Adekanmi said the fear of Hurricane Harvey vehicles finding their way into Nigeria is more so because, Texas, the main spot of the Hurricane Harvey, hosts a huge percentage of Nigerian Americans.

‘’Check it, Texas, where the disaster struck is the home of our people and most of them rely on business of used vehicle export to their home country. Statistics shows that the cities of Houston, Fort Bend, Tarrant, Dallas, and Travis counties have some of the largest Nigerian population in America.  This is in addition to the fact that the Houston port tops the list of shipping ports in the US for shipping of cars that cannot move,’’ he said.

Speaking further, he stated that it will not be entirely surprising to start seeing some of the flood-damaged vehicles entering Nigeria before the end of this month, with unsuspecting buyers assuming the liability of owning one of them. He also called on government through various relevant agencies like the Custom and Standard Organisation of Nigeria to be at alert to forestall unnecessary influx of used cars from the areas where the disaster took place.

 

Varied opinions

Are flood-damaged cars dangerous? This is the question curious consumers will want answers to as the issue ranges on. While it is believed in some quarters that there is nothing wrong with it, some believe they are not only dangerous to the environment but that they can also cost more than money.

James Olowo, a dealer in tokunbo cars at Ilupeju, Lagos, was of the opinion that there is no difference between other fairly used cars being brought to the country before and the ones that may be brought in as a result of the flood.

‘’We should avoid unnecessary creating fear where there is none. To me, the natural disaster will not affect our market in any way. After all, we all know that some of the fairly used cars that are being brought into the country are accidental cars. So, what are we saying?’’ Olowo said.

But to the Director of Operations at Cars45.com, Chinedu Okwuosa, flood-damaged vehicles are nothing but liabilities and death trap. He said:“In today’s hi-tech vehicles, a car submerged in flood does not only compromise its engine, both electrical and electronic systems are also destroyed. This is besides the corrosion that would have started affecting the body.”

“Just imagine what will happen after you have subjected such vehicle to the Nigeria terrain with all the bad roads and hot weather condition,” he added.

Speaking further, he pointed out that at best, some of these vehicles should be classified as totaled and sold as scraps, urging businessmen not to get carried away as to pass on these flood-damaged cars as clean titled vehicles.

Tip for prospective car buyers

As the issue continues to generate controversy, experts have called on consumers to be wary if they are looking to buy a tokunbo vehicle within this period or the next couple of months. To this end, they have identified a few things that can help prospective car buyers spot the ones damaged by flood.

One, consumers have been urged to speak to dealers because of the belief that a dealer that has formidable reputation will not risk it to rip his customer off. ‘’Ask the dealer if the car you are eyeing is flood-damaged. Any answer that is not a firm ‘No’ should be of concern to you,’’ the statement stated.

Prospective car buyers have also been advised to check the title to know if the car is coming from a region affected by flood.  Related to this is the advice that those willing to buy cars should endeavour to  check the smell of the vehicle they are willing to buy because it is believed that the quickest way to sniff out whether or not a car has flood damage is to literally sniff it.

‘’It’s very difficult to completely rid a flood-damaged car of its moldy aroma, and mildew formation is a sure sign that the car was exposed to significant amounts of water. This unpleasant smell is a helpful clue for prospective buyers,’’ the statement further stated.

Another advice given to consumers is that they should look out for rust. ‘’ The time it takes to export the car from America to Nigeria would have been enough for some parts of the car to start rusting. If you go to buy the car with an experienced inspector, it should not be hard to spot the emerging corrosion,’’

Perhaps to play safe, the advice of the CEO of Cars45, EtopIkpe might be worthy of consideration. Ikpe had stated emphatically that if anybody is willing to buy a tokunbo car within this period, such a person may want need to think twice and settle for registered vehicle, saying it may be far safer than the shiny tokunbo cars.

This, according to him is because, “all too often, such vehicles get, at best, cosmetic repairs that mask, rather than resolve, longer-term issues, such as rust, mold, and mechanical problems that could plague buyers later-on”.