WhatsApp NowIncoterms determine who pays for freight, insurance, customs and risk transfer. In vehicle trade, the wrong Incoterm can silently add $2,000–$5,000 per unit or shift liability to the wrong party. Here is how experienced importers structure their deals.
The four terms that matter most in auto trade
| Term | Seller covers | Buyer covers | Best for |
|---|---|---|---|
| EXW | Packaging at factory | Everything after pickup | Buyers with own freight agents |
| FOB | Delivery & loading at origin port | Sea freight, insurance, destination | Most common for cars & parts |
| CIF | Freight + insurance to destination port | Destination customs & delivery | Buyers wanting one price |
| DDP | Everything to buyer's door | Almost nothing (import VAT timing varies) | Duty-paid door delivery programs |
Real example: one used SUV from Shanghai to Lagos
- FOB Shanghai: vehicle at port, buyer arranges shipping
- CIF Lagos: freight + marine insurance included, ~$2,800–$3,400
- DDP Lagos: import duty, clearing and door delivery — add ~15–25% of value
- Risk transfer point: onboard the vessel for FOB/CIF
Three mistakes to avoid
- Assuming CIF includes destination customs — it does not
- Choosing EXW without checking container stuffing costs
- Ignoring demurrage and port-storage windows at destination