Low hanging fruits are available for prospective Nigerian investors in the country’s and continent’s growing used-car market, as the nation’s automobile assembly plants remain stagnant. This has raised doubts on the part of automakers willingness to make further investment in the country on the back of Federal Government’s reduction of import taxes on imported vehicles.
The opportunities for investment are opened on the back of the growing huge number of African used-car market, which unfortunately Nigeria controls just a ridiculous 1 percent financial credit penetration despite the country’s massive population size.
Figures obtained from the National Bureau of Statistics (NBS) (October 2018-September 2019) indicate that Nigeria spent N1.08 trillion on importation of used vehicles, popularly called Tokunbo and motorcycles in one year.
While Nigeria accounts for only 1 percent credit penetration in Africa’s used-car market when compared with other African nations, prospective investors and car buyers will benefit more when there are opening for credit financing with convenient interest-based credit package available for both the consumer and the registered automotive dealerships.
According to a report by Autochek Africa, out of the $45 billion used-car market on the African automotive market, Nigeria, South Africa, Algeria, Democratic Republic of Congo (DRC), Libya and Egypt account for 54 percent of the value.
Autochek Africa, an online automotive marketing platform currently providing one-stop consumers and dealer marketing financing solutions to prospective fleet and individual buyers, says in Nigeria, nearly every used car is bought without loan.
With annual volume of transactions of 9 million units and average selling price of $5,000, rising middle-class income is valued at $1.2 trillion as at 2010 according to African Development Bank (AfDB), yet the Nigerian market is not tapping into the opportunity presented by the multi-billion naira business, BusinessDay checks from Autochek Africa research reveal.
According to Etop Ikpe, founder/CEO, Autochek Africa, said huge opportunities still abound for the African automotive market, with Nigeria emerging as the highest beneficiary with a number of factors.
These include increasing openness to technology adoption enabled with 44 percent penetration rates of mobile phones, increase of 453 million internet users as at 2017, with $28.6 billion or 45.6 percent of global mobile money transactions from Africa as at 2018.
The Autochek CEO expressed optimism that Africa’s, and particularly Nigeria’s used-car market, will expand if a number of daunting market challenges posing serious threat to the corporate fleet, government fleet and individual customers are tackled headlong.
He listed some of these challenges as the lack of standardised pricing model, mysterious car grading and condition (falsification), lack of standardised after-sales support, absence of credit options and absence of one-stop shop for cars, insurance and registration.
He insisted that, for the rising but impoverished middle-class to own a vehicle, dealerships and auto online marketing platforms should design and prioritise asset light and technology-driven solutions capable of delivering value to every stakeholder along the automotive value chain.
For Mayokun Fadeyibi, vice president, commercial, Autochek, Nigeria will continue to lag behind without a functional ecosystem that offers wholesome solutions to support unrivalled customer experience. These include providing consumer finance facilitation, dealer financing, insurance warranties grading standardisation and trained inspectors.
Other areas are trade-in services, import inventory, consumer to consumer marketplace, brand and marketing, lead management, dealer management systems, customer relations management and liquidation services.
Industry watchers state that as technology keeps evolving, so is the ride-hailing industry that is spreading all over major commercial cities, and all competing in the ride-hailing industry.
Autochek Africa believes that as middle-class appetite to acquire vehicles continues to rise and the ride-hailing industry continues to expand, investors will continue to spend trillions of naira to import used vehicles. This is pending when the government decides to match words with actions on encouraging full activation of the presently dormant auto assembly plants to go into full-scale operation.
