Nigerians besiege $10bn Hurricane-wrecked used-car auction
Nigerians buying used cars during this years Christmas rush and beyond, run the risk of getting short-changed by way of acquiring vehicles impaired by ‘Hurrican Harvey,’ which hit the US state of Texas on August 25 this year, with sever floods submerging homes and other properties, including vehicles.
Auto experts say vehicles submerged in water for lengths of time, are prone to engine corrosion, as well as damage to sensors and wiring systems, among others and can be very delicate and expensive to repair.
Informed industry sources say between 75% and 80% of auto vehicles imported in to Nigeria, come from the US because, like Nigeria, that country uses left hand driven vehicles, while much of Europe use left hand drives.
In 2016 an estimated 7,000 new cars and 200,000 used ones were imported into Nigeria.
US-based Nigerians have been increasingly raising money wagers in on-going selling sprees of used vehicles damaged by Hurricane Harvey and Irma which hit the states of Texas, Louisiana and Florida.
Hurricane Harvey destroyed between 300,000 to 500,000 vehicles in Houston alone, according to Cox Automotive estimates. The cost of licensed cars lost in the storm — excluding vehicles flooded while waiting in dealership parking lots — falls between $2.7billion and $4.9 billion.
Although fewer cars were estimated to have been lost to Hurricane Irma, an estimated 200,000 to 400,000 vehicles were destroyed by the storm.
While over 100,000 insurance claims for cars impacted by Harvey have already been filed, with the number of claims expected to rise, Carfax shows that about half of the estimated 500,000 cars damaged by Harvey will end up back in the marketplace.
Nigeria’s auto industry relies on imports from overseas to meet demand. According to the Nigerian Bureau of Statistics (NBS) over 70percent of these vehicle imports come from United States of America. In 2016, US Census Bureau notes that 450,000 vehicles were imported into Nigeria from US out of which about 70percent were used cars.
Despite the fact that cars from the US which dominate the used car market in Nigeria satisfy criteria of price, durability and resale value, the fear of Hurricane Harvey vehicles finding their way into Nigeria ports is palpable because Texas, the main affected areas by the Hurricane Harvey, hosts a reasonable percentage of Nigerians based in the US, many of them engaged in the businesses of shipping used vehicles to Africa’s biggest economy.
“For now, I will advise anyone in Nigeria not to buy cars shipped into Nigeria with Texas registration. Most of them are flood-ridden cars which Nigerians buy here and ship to our country,” Adesola Bakare, a Texas-based Nigerian, lady told BusinessDay.
When water seeps into a vehicle’s electrical, computer and mechanical systems, the vehicle generally gets a salvage title which increases the risks of the buyer in the long-run, said a US-based automotive expert.
“I was out in my kayak the day after the rain stopped (when the bayou was still rising), paddling through a very expensive neighbourhood and looking for anyone still stranded in their homes. I came across one house where four very nice cars had been pulled right up to the porch steps to get them as high as possible. One was a Porsche. Unfortunately, the water was already over the back bumpers. I’m pretty sure the cars were done”, said Vivian Bush, a resident of Houston.
“My colleague flew into Houston this weekend from Dallas. He came for auction. Some of the Harvey-damaged cars are cheaper to buy here, but they will surely develop faults one day”, a Dallas-based Information Technology professional, who had worked in one of Nigeria’s Tier-2 banks told BusinessDay on the sideline of an informal event at Holywood Event Center, Sugarland Houston. “Both of us work in the same office but he makes extra income buying cars for sale in Nigeria”, he added.
The two big storms of the 2017 U.S. hurricane season destroyed more vehicles than Hurricane Katrina in 2005 or Hurricane Sandy in 2012, which claimed 200,000 and 250,000 cars respectively, according to Cox Automotive.
The estimates for the cost of Hurricane Harvey’s damage range from $65 billion to $190 billion. If the real cost falls on the higher end of that range, it could become the most expensive disaster in the history of the U.S. Meanwhile, Hurricane Irma damage could end up costing between $50 billion and $100 billion.
“Used car buyers should do their homework and use online tools to make sure they are getting a fair deal from a top-rated dealer and also ensure that the car they are buying has not been detrimentally impacted by the recent flood,” said CarGurus.com data analyst, Lisa Rosenberg.
Experts said in today’s hi-tech vehicles, cars submerged in flood do not only compromise their engine, but electrical and electronic systems are also destroyed. This is in addition to the corrosion on the body.
A lot can go wrong when dealing with flood-damaged vehicles. Keep in mind: starting your car could be dangerous; the oil dipstick—water droplets found here could be indicators that your engine is flooded. That would likely mean your car is damaged—or at least your cylinders will need replacement. Engine cylinders—they are meant to compress air, not water. If they’re damaged, they’ll have to be replaced, and any corrosion from flooding will need to be dealt with.
For the oil and transmission fluids—clean transmission fluid will look redder in colour, while dirty fluid will look deeper brown. Furthermore, there could be water in your fuel tank. If there is, you will need to completely empty the tank. Modern cars are filled with electronics –prepare to face the problem of a damaged brainbox due to flood.
Though auto sales dipped in August, due to Hurricane Harvey and Irma, the loss of vehicles eventually led to a spike, as drivers replace their cars, especially for trucks and SUVs.
Iheanyi Nwachukwu, just back from Texas
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