Before he was referred to Cars45, Segun Odunayo, 45 years and father of three, has visited nearly all the car lots in Surulere, Lagos along with a mechanic to see potential cars for sale.
For every time, the cars were not up to the specifications advertised by the car agent or dealer. He would go home disappointed and still have to pay the mechanic N3000 many of the days.
His search ended when he found Cars45 online through a friend. After he identified the vehicle he wanted to buy, it took less than two days for the transaction to be consummated.
“I was particularly impressed by the level of inspection they had carried out on the car. So I really did not need to go with a mechanic – I still went with one, just in case,” he told BusinessDay.
While Nigeria is one of the largest destinations for used cars from around the world, consumers have also faced challenges with quality vehicle inspection services. The usual practice for any potential buyer is to go with a local mechanic. The bigger problem oftentimes is finding a good mechanic and convincing him or her to follow the buyer for inspection.
The capacity to provide inspection services to both new and used cars has been the main selling strategy of Cars45 since it was founded in 2016. Cars45 also sells new cars. This week the company announced a merger of operations with Jiji, the largest online marketplace in Africa to create an even larger platform for buying and selling cars.
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It has been a rolling plan for Cars45 since it raised $5 million from Frontier Car Group (FCG), a Berlin-based company that builds used-car marketplaces focusing on emerging markets. FCG which became the largest shareholder and parent company received $400 million from OLX Group two years later valuing the business at $700 million.
The investment valued FCG at $700 million, with OLX Group taking a controlling stake. In 2020, OLX Group, via its OLX Autos brand, acquired Cars45 from FCG.
The agreement will see Jiji and Cars45 combined their operations in Nigeria, Ghana, and Kenya to create one of the largest automotive marketplaces for end-users, dealers, and OEMs. Jiji already has a presence in Uganda and Tanzanian markets but the plan is to focus on the regions where they generate the most activities. In that case, the Nigerian automotive market is likely to take precedence as the country’s nearly 200 million population represents an opportunity for a thriving automotive market.
Nigeria recorded a total sum of N1.28 trillion as of the value of ‘used vehicles,’ popularly known as Tokunbo, and motorcycles imported in one year (Q3 2019 – Q2 2020), showing an increase of 42 percent, compared to N899 billion recorded in the corresponding period (Q3 2018 – Q2 2019). The new cars market is not so robust due to high tariffs and declining income levels.
According to the two companies, the merger brings a new level of convenience layered with technology and transparency in buying and selling cars. Cars that will be traded would be certified through an over 212-point inspection process which Cars45 has expertise and experience.
“Merging with Jiji is aimed at creating a new kind of automotive retail experience for users in Africa. We are confident of jointly building an African Champion in the O2O Automotive Sector. Together we look forward to making transactions transparent and convenient for our customers, dealers, and franchisees across all our current and future markets,” Soumobroto Ganguly, CEO of Cars45 said,
He described the business model of Cars45 and Jiji as complimentary given that Jiji has a good database, merchants, sellers, and dealers. Jiji also has significant performance management in Nigeria to generate leads. Cars45, on the other hand, offers a strong transaction side in terms of bookings and inspections for closing transactions.
Yuliy Shenfeld, Director, Africa, Jiji, said the plan is to transform the market of buying and selling cars with Cars45 as the cars will have to go through inspection first before being listed on Jiji. For buyers like Odunayo, it could mean not spending money on mechanics.
“We are looking forward to creating a new advanced experience for customers. Undoubtedly, our collaboration will bring additional value to the consumers. The Cars45 inspection process covers both the technical details, legal, and vehicle history and documentations. With Cars45, you can sell your car in less than one hour. Now Jiji sellers will also benefit from this, and they can use more than 100 locations of Cars45,” Shenfield said.
