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Just got this '02 civic from a family member (170k, 5speed), noticed this weird stuff on the rims. Any ideas as to how to remove or should i just paint over it?

picture included.

 
Rep Power: 244

I would remove it befor painting the wheels. The paint is not going to adhere to that very well. See if you can remove it with your finger nail. If not a light steel wool, or sandpaper might take it off. Try it in an inconspicuous area first to make sure it doesn't scratch the wheel.

It looks like some sort of corrosion or something from the weather.

 
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Looks like corrosion to me too.

 
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I third corrosion.. The worst I've ever seen might I add.

 
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I also agree that it looks like the metal is starting to corrode. I believe that the clear coat on the rims chipped away and left the rim vulnerable and exposed to the elements. Definitely replace or refinish those rims