Mecho Autotech, a startup providing automotive spare elements, car repairs and upkeep providers, has raised a $2.4 million pre-Sequence A spherical. The agency targets the Nigerian market, the place 90% of the nation’s greater than 12 million registered vehicles (primarily used) require common upkeep to keep away from recurring breakdowns.
Its main enterprise connects car house owners (people and fleet house owners) with workshops that deal with car repairs and upkeep. Retail shoppers in Nigeria usually have three options for performing vehicle repairs: make the most of OEM mechanics, aftermarket mechanics, or roadside mechanics. As a result of vehicle elements are made in-house, OEM technicians present high-quality however expensive providers. However, most automobile house owners can afford the providers of aftermarket and roadside technicians, which have much less high quality.
Since its inception in 2021, Mecho Autotech has seen greater than 6,000 vehicles from B2B and B2C shoppers bear repairs and upkeep from over 110 authorised workshops (three of which it owns). Within the course of, the vast majority of the problems the agency has had in executing these restore and upkeep requests have come from buying high quality substitute elements, in accordance with CEO Olusegun Owoade in an interview.
Mecho Autotech stated final January {that a} portion of its seed funding shall be used to develop its after-sales spare elements worth chain. Equally, the enterprise will double down on wholesale distribution of those elements with its present pre-Sequence A funding.
Increasing into wholesale spare elements distribution
Nigeria’s automotive aftermarket spare elements and upkeep enterprise is estimated to be value $8 billion. Spare elements account for 80% of the worth, with Nigerian car house owners paying a mean of $650 yearly. With over 12 million registered autos, of which 90% are imported and pre-owned, the automotive after-sales trade in Nigeria is extremely fragmented and casual. This ends in a disjointed aftermarket spare elements provide chain.
“As you understand, spare elements are imported into the nation as we now have zero native manufacturing. Greater than 95% of the companies engaged on this spare half worth chain are small and casual with technical know-how and distribution channels,” stated Owoade.
“However due to their measurement, they band collectively to import elements to the nation, however due to that, stock just isn’t sturdy and high quality isn’t uniform. There was a necessity for us to become involved in that. And what additionally helped that call. In case you have a look at the breakdown of market share or market alternative, it’s usually 80%-20% between spare elements and repair cost.”
Mecho Autotech secured a accomplice in Tokyo-based enterprise capital agency World Mind Company to help its new path of managing the importation and distribution of aftersales spare elements. In line with Owoade, World Mind Company, one of many startup’s traders on this spherical, would join Mecho Autotech to Asian aftermarket elements makers keen on supplying the African market.
“We see a big alternative within the development of the automotive aftersales market in Nigeria,” Hiroto Sorita, the agency’s company director, stated of the funding. “World Mind will help Mecho on elements procurement from Asian suppliers and enterprise growth for the brand new providers to penetrate this fragmented market.”
Ventures Platform and Uncovered Fund are the opposite traders concerned within the spherical.
Provide-chain-tailored apps for the after-sales and upkeep market
The 2-year-old agency, which operates throughout Nigeria, will act as an importer, supplying spare elements stock to over 150 elements distributors, whose distribution community will meet the calls for of workshop house owners and finish clients. This can stop stockpiling in-demand spare elements like tires, suspension elements, brakes and batteries.
Consequently, Mecho Autotech’s foray into wholesale aftersales spare elements overcomes the stock downside that elements sellers confront. In the meantime, these distributors additionally wrestle with stock finance considerations arising from enterprise shoppers who pay a number of days or even weeks after a service is accomplished.
Picture Credit: Mecho Autotech
Consequently, Mecho Autotech will develop an app in This fall 2023 permitting distributors to obtain stock finance and handle their stock gross sales; the identical service will allow workshops to entry working capital and purchase spare elements, Owoade stated. Equally, a separate app for company fleet house owners will permit them to search out authorised workshops, obtain upkeep finance and handle car upkeep information.
“We’re nonetheless connecting people and fleets with car repairs and upkeep workshops. Now that we’ve entered the spare elements worth chain, we see a possibility to attach it with the unique enterprise by producing demand for spare elements from elements distributors by way of the app,” remarked the CEO.
“We additionally see the app as a software for workshops to buy spare elements and straight entry working capital financing. Because the variety of workshops on the community grows, we are able to upsell and push shoppers’ want for automobile repairs to them. We additionally developed free software program for fleet house owners to handle end-to-end operations, together with visibility, upkeep and success providers.”
Mecho Autotech will acquire information on spare elements demand from these particular person functions suited to the assorted provide chain stakeholders to evaluate market provide. These provide chain stakeholders will entry as much as ₦10 million (~$10,380) in financing (stock financing for distributors, working capital for workshop house owners and car upkeep and elements procurement for company fleet house owners), in accordance with the startup.
Owoade famous that the supply of the financing is by way of financial institution partnerships; Mecho Autotech presently has entry to a credit score line of ₦650 million (~$675,270) from a single financial institution partnership. The agency, whose main income comes from commissions on car repairs and ancillary revenues from upkeep subscriptions, is in talks with different banks to extend its line of credit score, in accordance with the CEO.
