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How Tech is Changing the Automotive Trading Experience in Nigeria
Precious Ola Adesina
Mention the words ‘Nigeria’ and ‘consumer market’ there is a strong chance that words like aspirational, status, and price would come into the fray. Understandably, these words highlight the average Nigerian’s affinity for big dreams, bold goals and the best things that life has to offer.
Each Nigerian has a different reason for craving success, but as a people, there are also commonalities. It is possible to argue that many cultures in Nigeria are status-driven – an individual’s success is spotlighted in tandem with their social standing. As such, the average consumer in Nigeria will make purchase decisions that reflect their current or aspirational status. A clear exemplification of this can be viewed in the seemingly improved status-related consumer choice of owning a car, traveling to a luxury location, etc.
Of the over 11 million cars recorded by the National Bureau of Statistics in September 2017, almost 5 million of them were privately owned. Private vehicles accounting for 40.3% of vehicles in a largely commercial country says everything about what people have to know about the value Nigerians place on automobiles.
By the end of 2018, the number of cars in Nigeria increased by 2%, just as Nigeria’s population continued to grow, leaving the ratio of cars to Nigerians at one to six. But more interestingly, while the number of cars increased by around 200,000, the number of new driver licenses was about 3 times that number, totalling 630,868. It, therefore, means that some Nigerians are aspirational enough to learn how to drive, get a license even before they can afford a car. (There is also the factor of a valid means of identification, especially for making applications and other things.)
Now, while these numbers and the ratio they represent might not put Nigeria as the highest-ranking emerging market within the automobile space, it shows the potential that exists within the market and sheds a little light on the challenges that also exist in the market.
Interestingly, the Nigerian automobile market remains one of the most promising within the African region, and for long has been driven by the country’s middle class. The market, despite experiencing more patronage within the used-car segment of the industry year-on-year, continues to see some tiny growth within the new-car segment from both more established car brands and newer car brands.
The used-car segment of the market is also not without its challenges, from import constraints like the tariff raise carried out by the Nigerian government which came into effect on January 1, 2014, and greatly reduced car imports due to the huge fees required of buyers, leading to a nearly 65% drop in car imports within a year, to the probability of ending up with a car in very bad health, concealed by a shiny exterior.
While these challenges haven’t slowed down operations within the segment, they have made the process of owning a car in Nigeria a big hassle, heightening the trust issues within the space.
As with many issues facing Nigeria and Nigerians, technology continues to represent a beacon of hope in solving most of the challenges, especially with access, that Nigerians have to face while living and operating within the country.
When Cars45 came into the Nigerian automobile space, the issue of possibly ending up with a bad car after striving so hard to save up for it was one of the first things it sought to tackle with its technology solution. As a marketplace where anyone can buy, sell or swap their car, it wanted to ensure that every car being transacted on their platform had an easily accessible record of its history and full health condition – how long it has been around, where it was probably first used, what works, what doesn’t and what might require some fixing.
Since launching in 2016, Cars45 has strategically transformed a market which was largely unstructured and fragmented, dealing with trust issues, low customer satisfaction and other problems, now delivers optimum buying experiences to its customers. From making available real car reports that help inform buyer-decisions, to building enough trust among customers to get them to buy cars from their online platform, the company shows its understanding of the growing trends among the Nigerian middle class and millennials, many of whom are now saving for or purchasing their first cars. This innovative approach reflects in the over 40,000 car inspection carried out in 2019 alone across its operations in 11 states in Nigeria.
In more ways than one, this technological approach has helped widen the customer base who can readily access the automobile market in Nigeria. With cars spread across a wide price range, all catalogued on a single platform, anyone can log on to the website (or the social media pages) and browse their car of choice without visiting a single dealership or travelling to a neighbouring West African country. If you factor in the manpower that would have been expended travelling to a neighbouring country, time saved, etc., one can postulate that the company will save each buyer over N250,000 in expenses. Even more interesting is the opportunity it gives people who might quickly want to sell their cars or swap them for a different one they now fancy. Not in a long time have people been able to quickly liquidity an asset that is regarded as a fixed asset as they can now.
Despite these strides, understanding the African market means understanding that while Africa is teeming with a growing young population who are mobile-first and embracing technology rapidly, a lot of processes are still offline. Businesses, therefore, have to find a balance between offline and online, and Cars45 exists at a sweet intersection.
Given the brand equity built in over 4 years of operations, the Cars45 brand has become a seal of approval that buyers can trust any car (buoyed by its over 200-point inspection system) purchased from a dealership with the company’s trademark and this has become the driving force for the Cars45 Franchise Program, that is, helping dealerships across Nigeria generate more revenue. With training, operations and marketing support from the Cars45 team, dealerships across Nigeria quickly transform into businesses operating with the same business model as Cars45, which places priority on trust, quality and great customer service.
The franchise model is a win-win for Cars45 and its franchise partners. On one hand, it spreads the company’s reach to more places than it can get to operating alone and on the other hand, gives business owners a major boost for their companies. By putting a low barrier of N3million naira as start-up cost in Lagos, the company is also ensuring that even young dealers or individuals with disposable cash can become partners and scale their businesses.
In similar fashion, Cars45 in 2019 unveiled the Autopreneur programme which is arguably the strongest salesforce within the automobile market in Nigeria and one of the elements that has led to increased car-ownership in Nigeria. The programme which focuses majorly on empowering young people by giving them an opportunity to earn from referrals either for car purchases or car sales has become an enabler of youth entrepreneurship in Nigeria while further building the strength of what can best be referred to as the ‘Cars45 Network’.
Within a year of its launch, the Autopreneur programme became a 4500-member unit and added 1500 more members in 2020 to become a 6000-member programme, all of who transact directly with their clients from a mobile app, where they are able to build smaller teams that earn them extra commission and more bonuses.
Cars45’s biggest strength still lies in its mission to make automobile trading the easiest it can be within Nigeria and Africa. The importance of this mission is what has seen it expand as rapidly as it has, without losing all the elements that built its quality and earned users trust in the first place. Maintaining that quality is why each touchpoint of its ecosystem has a training element to it, which ensures; that partners understand the mission and stick with it, that its autopreneurs are learning enough to someday expand and further deepen the automobile market in Nigeria, and that most especially, users understand how the company can help them achieve their own dreams and aspirations.
*Ola Adesina, National Head, Center Operations at Cars45, Nigeria’s leading tech-enabled automotive trading platform