Ikpe: Credit Facilities Will Enhance Access to Used Cars

Etop Ikpe

The Chief Executive Officer, Cars45.com, Mr. Etop Ikpe, in this interview talked about the invention of Cars45 and the challenges facing Nigeria automobile industry. Nosa Alekhuogie brings the excerpts:


What necessitated the establishment of Cars45. Has it been able to meet its set goal since inception?


We created Cars45 basically to fill a gap we found in the automobile industry particularly around how people buy and sell used cars. So if you think about it, when people talk about the automobile policy, it is focused on the one per cent because everything is focused on brand new cars. However, 99 per cent  of cars that people drive are used cars. There are lot of problems around pricing and how people verify cars, including various things around it. I have had issues trying to buy or sell cars. So I figured that it’s a big industry. It affects a lot of people and it definitely needs some level of transparency and efficiency. We also saw that it was something that affects a lot of people, with lots of challenges but very important industry. Only two to three per cent of Nigerians would ever buy a home, so it’s the most expensive purchase a lot of people would ever make, and that was why we figured that it was very important to go into the business to fix the identified challenges.


How long have you been doing the business in Nigeria and what are your greatest challenges?


We got into Nigeria in 2016, about three years now, and we started the business with some reliable partners. It’s a broad base, so we have investments. It’s a mix of individuals and institutions and we have investors. There is a huge opportunity for us and I think we have grown very quickly.  We have been lucky that the market has been very receptive to the services that we provide. For us, quality service is very important. I think that sometimes, failing to deliver that quality service  can be very painful when customers are dissatisfied. So, I think really that those are some of the challenges. Also, being able to consistently deliver a hundred per cent quality service all the time for a fast growing organisation, but it comes with training and a lot of development. As a business that is a hundred per cent focused on customers’ service, every time there is an issue or we don’t deliver a hundred per cent customer service, it is very hurtful to the organisation.

On the other end as well, the market is very fragmented and so there is very little structure around the market so as you develop, the ecosystem that is needed to support the business might not necessarily be there. It simply means we have to build a lot of partnerships and relationships and a lot of other parties. To be honest, not everybody is ready to move in the direction we are proposing, some people are comfortable just operating small but I think it’s a gradual process. If you are innovating around something, then part of the skill set that you need is patience and you need to develop a market over time.

The economy hasn’t been at its best, but that is kind of over flogged and I don’t really want to focus on that but I think one other area is financing; being able to provide affordable credit to people. Credit and the automobile industry go hand in hand. We found out that it is not just available when it comes to used car space whereas this is something that is very available in anywhere across the world. Financing is required to spur automotive growth because of the size and value in place. We have brought a lot of things that help finance houses to be able to finance these cars by our reports and evaluations, these are things that didn’t exist before. So we have taken this and put it into consideration but I think getting some of the financial institutions to take that first step to begin to look at the opportunities is also a big challenge in the industry. We need to look at this not from a perspective that its innovation per say, but about standardisation. It is something that exists anywhere in the world. So the key thing is how do we make this work in Nigeria because we can’t have a strong automotive environment without available finance for people as well.



Where do you see the automobile industry in Nigeria in the next five to 10 years?


Globally, the automobile industry is going places. I think it is going to take a lot of different directions. There are several things that have come up like the drive around the automotive policy. If there is a consistent focus on vehicle manufacturing, I expect that on brand new cars, there should be a lot more manufacturing going on over a ten year period and skill sets should be better. At that point in time, finance should be more accessible and affordable because financing is improving generally in Nigeria. On the used car side, I think there would be a lot more synergy between the new car industry and the used car industry. The automotive industry in Nigeria is one that is not just of interest for Nigerians but globally it is an interesting market because of the size of our market, our projected growth and the fact that we have a very low motorisation rate. Motorisation rate is basically your population against how many cars are available and we have a particularly low motorisation rate with very little public transport infrastructure. So, if you think about what can happen quicker, extensive public infrastructure or more cars for people? Obviously it is more cars for people that can happen quicker. So I think as things develop and as young people move to working class individuals, we are going to see a demand and the demand would continue to grow for cars. The key thing here is what direction are we going? It is really a policy thing.

Also, the vibrancy of the industry is driven by the finance and credit available for people to access cars. If that isn’t fixed, something that should happen in five years might end up taking fifteen years. So for acceleration, it really depends on what kind of structures that we put in place for financing for the automotive industry to be more accessible to people.


How do you think the industry could be stimulated to address some of the challenges?


In terms of stimulating the industry, we will need to look at things like the minor spare parts being produced locally as well. Things like batteries, tyres, and things that can boost and improve skill sets among people. That is also important as well. If you are going to have a vibrant automotive industry, there are some key components of the cars that need to be produced in the country. Funny enough, Nigeria used to produce batteries and tyres; these are functions of power. Nothing exists without the other. We can’t go there if certain things are not in place like power. I don’t want to believe that in ten years from now, we would still be talking about power.


How do you create value across the Eco System?


Basically, we can start from what we call the supply side. When someone wants to sell a car, we start by enabling the transaction between what we call the wholesale buyers of cars who are called the car dealers. We typically connect someone who wants to sell a car to a car dealer and we do that by providing information to the car dealer that can help them make a buying decision without physically being present. This solves the problem for a customer. So, what a customer would do is go to any of one of our inspection centres, inspect the car and put the car into an auction. That auction usually lasts for 30 minutes. The inspection report is uploaded into our auction data base and the dealers on our platform have access to that inspection report, so they can bill on that count. So it is very simple, straight forward and increases productivity as well. The dealer doesn’t have to move around, they can stay in one place and focus. They have access to cars outside their state or where they are and can get as many cars as possible.


Why is a second party not allowed to make transactions on behalf of a customer?


It is part of our verification process and that is what we call the proxy. We know it is a challenge but we also have a fragmented data base. We don’t have a central data base and we also don’t have digital transfer of ownership. We don’t have a centralised system where all authorities can go. There is a lot of work that we can do in terms of connecting these data bases. So, imagine if someone just brought anybody’s car to the location because they have the documentation, a person might as well stop a car on the road with the documentation and present it to be sold. So typically, even if we have done the inspection, the owner of the car needs to be present to consolidate that transaction. Unfortunately, we would like it to be done remotely, but, there is a lot of technology that needs to go into how it is done. We would rather ensure that the transaction is done right and ensure that people are not taken advantage of. So, it might be a bit inconvenient, but at the end of the day, it is for the customer’s protection.



What is your target audience and are you looking at branching into other modes of transportation like tricycles?


Our target audience is anybody who owns a car. Our usual age range is about 25 to 45 years. It is what we would call mid to upper middle class. That’s the age range of people that own vehicles so typically that’s our target audience. Also, our platform is built to enable anything but our focus for now is just cars. I think when we get to a point in terms of market share, we would open up to more. The focus for now is to build our expertise around cars.


Do you mind sharing your vision about Cars45?


Our vision is enabling and enhancing trade within the automotive sector and we are already doing that. The fact is that when people come to sell, we provide a platform for our car dealers to be able to sell the cars to the consumers. The dealers’ cars are actually displayed there, they have the inspection report, someone who comes to sell has experience, someone who wants to buy can look at that car and remotely check our inspection report which we have done.  We ensure that the car is fairly priced, people are not cheated and the consumer is protected. I think, if you look at all we are doing on both ends, we are trying to make the trading process and a lot of thing around the cars itself easy. Gradually, we would continue to work on our trading processes and improve our services as we go on.



On the average, how many cars do you sell in a month and where is your biggest market among all states of the federation?


Information in sales is still quite confidential, but the volume of sales is enough to keep the light bulbs on. Of course, if you look at it, Lagos has the biggest market for any business, and it is the same for our kind of business. Lagos has the highest number of cars registered in the country. Our business is in Lagos, Abuja, Port Harcourt, and Kano. We are launching in Onitsha and Ibadan soon. We are going to keep rolling into other cities over the next few months.


Can you tell us how much Cars45 is worth?


For me it is priceless. I think what we are bringing to the industry cannot be measured, compared with the amount of people and the amount of lives we touch. We have over 60 inspection locations, and each of them would do at least two or three inspections daily. We are providing value. So really, if we place the value today, the value would change tomorrow because of the quality of service we provide. It is something we focus a lot on. You can’t satisfy everyone but a lot of people tend to appreciate our service.