Auto Dealers Face Fresh Scrutiny Over Smuggling, Underpayments

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Car smugglers and marketers of smuggled vehicles should prepare for tougher times, the Nigeria Customs Service (NCS) warned on Monday, June 7, 2021. 

 Senior personnel of NCS in a chat with City BusinessNews Online explained that the warning became necessary following complaints that Nigeria had been flooded with smuggled vehicles. 

 Describing the 2019 raid on car marts across the country as ‘partially successful‘,  the senior Customs personnel explained that car dealers paid ‘substantial duties‘ during the raid. 

 Explaining further, the Customs Personnel said: “Some car dealers are smugglers. I mean new and used car dealers. We are working out modalities on how to carryout a similar exercise.  Expect a different approach this time“. 

 The Comptroller-General, NCS, Col. Hameed Ali (rtd), recently estimated that 90 per cent of cars in Nigeria  were smuggled into the country by unscrupulous dealers. 

 According to the Customs boss, many vehicles on display for sale at auto marts and showrooms across the country were smuggled. 

 Indeed, the development (smuggling) which gained traction in the first quarter of 2016 when the land borders were closed by President Mohammadu Buhari is allegedly perpetrated by auto dealers who ‘bribe their way‘ to clear the vehicles without payments of adequate duties at seaports. 

 Investigations revealed that similar dealings are reported at major land borders across the country, including: Kpobe (Ogun State), Ijowu (Ogun State), Seme (Lagos State), Idiroko (Ogun State), Shaki (Osun State), Daura (Katsina State), Baga (Borno State) among others. 

 During the 2019 raid, the Customs Comptroller General’s Strike Force and officers attached to the Federal Operations Unit (FOU), Zone ‘A’, Ikeja stormed Berger along Apapa-Oshodi Express Road and other locations across the state. 

 The team were at major car dealers‘ mart/showroom  including Affordable Cars Limited, Carlink Limited, Ineh Mic Autos, Globe Motors, Skymit Motors, Arrowhead Motors, Wonder Wheels Motors, Auto Point Motors, among others.  

 Showrooms in other states, including, Sokoto, Katsina were equally affected.  

  But, the dealers denied any wrongdoings, adding that the clampdown was embarked upon without due process and consultations. 

The dealers condemned what they described as the Gestapo style the shutdown was carried out and bemoaned the huge losses suffered. 

They added that they were responsible citizens of Nigeria contributing massively to the economy of the country through employment of a good number of Nigerians and payment of over N20billion as duty to the Federal Government. 

 Commenting, Executive Secretary, Nigerian Automotive Manufacturers Association (NAMA), Mr. Remi Olaofe,  said “You can’t say there is no smuggling in Nigeria. Our borders are porous and we have done everything we needed to do to improve it by shutting down the borders. But, they (borders) are still porous. 

 According to Olaofe, it is a fallacy to say for every vehicle coming into the country, appropriate duties are being paid.  

Stating that NAMA has proferred solution to the menace, Olaofe explained that with their portal and that of National Automotive Design and Development Council ( NADDC) , it will be 100 per cent impossible for anybody to import a vehicle and not properly register in Nigeria, adding that the portal will indicate that the appropriate amount of money is not paid.  

Olaofe said: “It is just as simple as that. But for the reason best known to the operators and the players in that market, they have refused to allow that portal to work.” 

Advising that  vehicles must be registered for them to be driven on the road, Olaofe added that “You can’t be driving a vehicle that is not registered. To know this, they should go to the licensing office because the licensing office cannot license a vehicle without first clarifying from the portal and that clears the vehicle. If that is not there, we have what is called the BIN number, it will throw up a red flag”. 

Explaining further, Olaofe said “I don’t represent the Fully-Built Units (FBUs) . My advocacy is for us to shut our doors against the FBUs. Assembling of vehicles in Nigeria is what I represent” . 

In his submission, Kunle Jaiyesimi, Deputy Managing Director, Massilia Motors, dealers of Mitsubishi brand of vehicles in Nigeria said most car dealers, including Masillia Motors are still selling their old stock, adding that the company stocked up to December for the 2021 business.  

Jaiyesimi said “To the assemblers, they are not happy with the Finance Act; it’s making the locally assembled vehicles uncompetitive compared to the Fully Built Units. For instance, Fuso and Canter (Mitsubishi) that we are assembling. It is cheaper to bring them in as FBU than locally assembling them. And that has affected our production lines. 

Jaiyesimi who is also the Chairman, Auto Group of the Lagos Chamber of Commerce and Industry (LCCI) proffered solutions, saying that “the only way for us to have some gain on the assembly line is for government to remove the import duty or reduce it. If they cannot remove it, they can bring it down to five per cent” . 

He argued that whatever duty reduction the government has put in place for them to enjoy is being wiped off by the exchange rate fluctuations,stressing that the CBN is not supporting vehicle importers at SKD or FBU level.  

Rather, he informed that stakeholders rely on the black market to pay their suppliers. 

” Once you are getting your Forex from the black market, whatever gain that is coming from the import duty reduction is lost in the over 25 per cent increase in the Forex rate”, Jaiyesimi added. 

 Further investigations however, revealed that both new vehicle dealers and second hand vehicles merchants are deeply involved in this business of short-changing the government through smuggling and underpayments.  

A key member of the United Bergers Motor Dealer Association (UBMDA) in his submission explained that dealers evade Apapa ports because of the high duties paid to clear vehicles.  

According to him, that is the major reason dealers’ resort to smuggle in vehicles at cheap rates,in order to remain profitable.  

Meanwhile, efforts made to get statistics of imported vehicles from Customs and various auto dealers were unsuccessful as at press time.  

The story is basically the same at West Star Associates Nigeria Limited, sole distributor of Mercedes-Benz vehicles in Nigeria.   

While different regions of the world make available sales statistics on a regular basis, Mercedes-Benz representatives in Nigeria and other dealers always turn down request for sales statistics.   

Contacted on Friday, a source promised to make necessary contacts within the company and get back. The source did not get back as at press time.   

However, for the first quarter of 2021, despite the challenges associated with Covid-19, Mercedes-Benz Cars sold 590,999 passenger cars across the world driven by China and United States  retail sales as well as strong demand for plug-in hybrids and all-electric vehicles. 

 Also, sales statistics for Toyota Nigeria Limited (TNL), Coscharis Motors, Kia, among others were not available as at press time.