Used cars eliminated in China are piled up and sold in Africa. The truth is not that simple with the seemingly low-threshold Nuggets track

preface

With the full popularization of new energy vehicles in China and the continuous acceleration of new car iteration, a large number of fuel-fired used cars have gradually lost their domestic sales advantage and become a source of idle and eliminated vehicles. The distant African continent happened to take over these vehicles. For a time, second-hand cars were exported to Africa and were labeled as "low threshold, high profit" by many car dealers, and a large number of practitioners followed suit and entered the market. But aside from the superficial dividends, is this track really open to everyone? Today, we objectively break down opportunities and risks.

1. Two-way matching between supply and demand, Africa has become the core market for used cars

1. There are sufficient sources of domestically eliminated vehicles, and the cost of obtaining goods is controllable

Nowadays, domestic car ownership is becoming saturated, and there is a huge stock of family mobility cars, economical SUVs, and light pickup trucks for 3-8 years. Such cars have no major accidents and are in good basic conditions. It is difficult to sell at high prices in the domestic used car involution market. Most of the cost of collecting cars is only 20,000 - 50,000 yuan. For models with slight appearance flaws and normal mileage, the price can be further explored. For domestic car dealers, it is better to export to Africa to revitalize their inventories rather than sell them at low prices. The wide supply channels and low screening difficulty are the core reasons why the track seems to have extremely low barriers.

2. Africa is in strong demand and there is a huge gap in the local market

Most countries in Africa have weak industries and do not have mature vehicle manufacturing systems. The prices of new cars remain high, making it difficult for ordinary people to bear. Local public transportation is backward, private cars are not only a means of transportation, but also a means of livelihood and freight. Cost-effective second-hand fuel vehicles have become a necessity for the whole people. Coupled with the gradual withdrawal of European, American, Japanese and Korean car companies from the African market, there has been a gap in the supply of used vehicles in the local area. However, China's second-hand cars are durable, inexpensive to maintain, and suitable for complex road conditions. They perfectly meet local consumer demand and are in short supply all year round. There is demand in the market and the supply of goods is easy to obtain. Coupled with a mature supporting chain of freight forwarding, shipping, and customs clearance, even small and medium-sized car dealers can rely on outsourcing services to complete the entire process of shipment. Used cars go to Africa, thus becoming a low-threshold track in the eyes of the public.

2. Behind the considerable profits, 50,000 yuan can also stabilize profits.

Putting aside the cost of vehicle acquisition, under the premise of bulk shipment in containers, a complete set of miscellaneous fees for domestic trailer, customs declaration, sea transportation, documentation, and testing can be reduced to as low as 20,000 yuan. Let us take the example of a high-quality family car with a domestic charging price of 50,000 yuan: the comprehensive landing cost of a bicycle is about 70,000 yuan. The mainstream shipping models are divided into two shipping models: wholesale in batches to local dealers (stable mainstream model) The net profit of a bicycle can reach 15,000. Among them, transit ports such as Togo and Benin have loose customs clearance policies and low risk of detention in Hong Kong, which is very suitable for novices to test the water; Nigeria, as the largest market in West Africa, has the highest demand, but tariffs on fuel vehicles are as high as 65%-75%, which has greatly reduced the bargaining space for buyers. In addition, many African countries have implemented duty-free policies for second-hand new energy vehicles, and the premium capacity of trams of the same price is generally higher than that of fuel vehicles.

3. The low threshold is only an appearance, and the four hidden thresholds determine success or failure

Many people mistakenly think that they can make money by collecting cars and finding freight forwarders to deliver them. In fact, the core thresholds of this track are all hidden under the table.

1. Qualification compliance is a hard bottom line and cannot be circumvented

The export of used cars belongs to a special foreign trade category and must hold the second-hand car export qualification registered by the Ministry of Commerce. Individuals and unqualified enterprises cannot apply for export licenses and cannot declare customs normally. If you choose to rely on a third-party qualification, you need to pay a service fee of 1%-3% of the value of the vehicle to directly compress the profit of the bicycle; if you ship the goods without a license and scrap the vehicle for export problems, you will easily face customs refunds and high penalties, which is extremely risky.

2. Policies vary greatly among African countries, and the risks of changes are difficult to predict (do not put eggs in one basket)

The vehicle age limits, tariff standards, and import certification requirements for each country in West Africa and East Africa are completely different: Kenya requires that imported vehicles not exceed the age limit and requires mandatory local testing; Nigeria ports are congested and have a high inspection rate; and trade policies of various countries may be adjusted at any time.

3. Foreign exchange control is strict, and hidden dangers of payment cannot be ignored (starting with full payment)

Most countries in Africa implement foreign exchange controls, and the payment cycle of overseas wholesalers is unstable. Coupled with real-time fluctuations in exchange rates, it is easy to swallow up the original profits. Some middlemen still have the situation of lowering prices and defaulting on final payments. Without long-term stable overseas cooperation resources, novices can easily fall into the dilemma of delivery of goods and long-term payment.

4. Failure to control the vehicle condition is equivalent to laying a hidden danger of loss (real vehicle condition)

Africa's road conditions are poor, and local auto repair facilities are rudimentary. Once comprehensive vehicle condition testing is omitted before going to sea, accident vehicles, watermills, and vehicles with hidden mechanical diseases will be directly rejected by buyers after arriving at the port. In this case, the costs of round-trip logistics, port detention, and warehousing are all borne by yourself, and one problem car may wipe out the profits of multiple cars.

4. Reference suggestions for newcomers entering the game and avoid the trap of following suit

Priority is given to Ghana, Togo, and Benin transit countries for testing water. Customs clearance is simple and risks are lower. It is not recommended to enter Nigeria, which has high tax rates, from the beginning; insist on assembling containers in bulk shipments, and assembling four trucks into one container to share shipping costs and reduce miscellaneous charges for single vehicles; give priority to wholesale shipments to reduce the uncertainty of payment back caused by retail;(Single units are selected to assemble cabinets) Complete a full set of third-party inspections before shipment of all vehicles, retain vehicle condition reports, eliminate the export of problematic vehicles, and avoid after-sales disputes from the source

written in the end

It is undeniable that there is indeed a good profit margin based on supply and demand dividends that eliminate used cars domestically and sell them to Africa, and the threshold for surface operations is low. However, a low threshold does not mean zero risk. Qualification compliance, overseas policies, payment safety, and vehicle condition control are the four core factors that determine whether a business can last long. Blindly following the trend and entering the game will only be confused by short-term dividends; only by understanding the rules, strictly controlling risks, and steadily deploying can short-term dividends be transformed into stable and sustainable long-term business.

Source: Xiong Yu, digital automobile export

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