Technology is transforming Africa. It’s improving so many aspects of everyday life, providing access to new opportunities and increasing social mobility. However, the wave of digital innovation in Africa has not, until now, had the same impact on the automotive industry.
Buying and selling cars in many parts of Africa is still a complicated, time consuming and unnecessarily costly process. The task of maintaining a car is also just as unsatisfactory. The entire process has remained largely analogue, while other processes have gone digital. For example, commercial mobility across the continent has been significantly digitised, as seen by the advent of ride-hailing and ride-sharing platforms. Yet conversations about how we can innovate and introduce more technology to the automotive industry as a whole barely gets any airtime.
Building trust and transparency
The African used cars industry alone is worth $45 billion, with nine million cars traded annually across the continent (one million cars are traded in Nigeria). There are great opportunities in the industry. However, lack of trust and transparency means people are hesitant to engage. For example, anyone that has ever bought, sold or maintained a car on the continent will be familiar with the informal nature of the industry and the opaque pricing and quality assurance structures that come with it. There is often no objective way or local price book to ascertain the value or quality of the car that is being bought or sold. Data around vehicle ownership, verification and dutiable value paid is still pretty much fragmented. As a result, buyers and sellers often have to take extra precautions to ensure that they don’t get ripped off.
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Just as with other industries across the continent, technology holds the power to address the challenges and explore new opportunities in the automotive industry. For example, a tech-enabled approach makes it easier to verify buyers and sellers to make sure that only serious individuals are engaged. The adoption of an escrow model can also make it easier to secure the exchange of products, services and money. The big question, however, is how do we take a totally offline system online? The short answer is to take it one segment at a time, and to make sure that the online offerings are improving consumers’ offline experiences.
Enabling more value-added services
Technology allows us to connect the dots within the automotive trade, making the entire process not only secure but seamless. It can also enable quicker access, greater choice and more opportunities to integrate other value-added services to the experience.
Buying a car is a significant investment for most people. Apart from the financial investment, buying a car also means setting aside the time to source and verify the car, as well as organise insurance and, possibly, explore finance options. At the moment, these activities are generally available from different providers which means potential buyers have to engage with each provider separately to get the service they desire. A tech-enabled approach makes it easier to access these services in one place. This approach will provide the opportunity to save money and time which means more of it can be spent enjoying the benefits that come with having a car, rather than enduring the process of trying to get one.
Improving the customer experience
In a system where car dealers and buyers have been traditionally underserved, technology provides the opportunity to make the most out of the market. For example, Nigeria has over 21,000 registered car dealers, Ghana 8,000 and Kenya 13,500 and countless informal operators who deal on the fringes without any structured support. Everyone is basically doing their own thing and there is very limited transparency. Technology provides the potential for standardised pricing structures, greater access to inventory and opens the door for expansion.
By adopting a tech-enabled approach, dealers can also improve the customer experience through value-added services such as background checks, vehicle financing, insurance and in turn improve their business prospects. The sheer size of the market and the breadth of the automotive value chain means there are many opportunities for partnerships and collaborations
Adopting a tech-enabled approach provides the platform for building the trust and transparency that the automotive industry needs to grow consumer confidence and expand. The demand for cars exists, and we have a steady supply. However, without effective and efficient structure, consumers will always be hesitant to engage.
The value creating opportunities in the digitisation of the African automotive industry are too big to overlook – think about the social impact across the value chain – vehicle financing (banks, micro-finance banks and fintechs), auto repairs (technicians, detailers, fitters) import services (third-party logistics providers) and aftermarket service providers (OEMs, spare parts, products and service providers) on one hand and (job creation, merchants, dealers have liquidity to trade or invest, their dependents also benefit from the value that is being created).
It is very heart-warming to read about the Nigerian government’s acknowledgement that the development of its automotive industry is a marathon and not a sprint as well as its commitment to partnering with the private sector to redefine the industry. Players like Cars45 are well poised and positioned to lead the charge in defining the future of automotive trade across the country and the continent by providing corporates and consumers with a brand experience that helps them with smarter choices.
We’ve already seen the transformative power of technology and the opportunities it has created across other sectors on the continent. With the right approach and by prioritising the right things, the automotive industry could soon be enjoying similar benefits.
Soumobroto Ganguly is Chief Executive Officer, Cars45, Africa’s foremost automotive tech-enabled platform that connects buyers and sellers across the continent
