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Mecho Autotech, a startup providing automotive spare components, car repairs and upkeep companies, 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 major enterprise connects car house owners (people and fleet house owners) with workshops that deal with car repairs and upkeep. Retail customers in Nigeria typically have three options for performing car repairs: make the most of OEM mechanics, aftermarket mechanics, or roadside mechanics. As a result of car components are made in-house, OEM technicians present high-quality however dear companies. Then again, most automobile house owners can afford the companies 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 permitted workshops (three of which it owns). Within the course of, nearly all of the problems the agency has had in executing these restore and upkeep requests have come from buying high quality alternative components, in line with CEO Olusegun Owoade in an interview.
Mecho Autotech mentioned final January {that a} portion of its seed funding might be used to develop its after-sales spare components worth chain. Equally, the enterprise will double down on wholesale distribution of those components with its present pre-Sequence A funding.
Increasing into wholesale spare components distribution
Nigeria’s automotive aftermarket spare components and upkeep enterprise is estimated to be price $8 billion. Spare components account for 80% of the worth, with Nigerian car house owners paying a median of $650 yearly. With over 12 million registered autos, of which 90% are imported and pre-owned, the automotive after-sales business in Nigeria is extremely fragmented and casual. This ends in a disjointed aftermarket spare components provide chain.
“As you understand, spare components 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,” mentioned Owoade.
“However due to their dimension, they band collectively to import components to the nation, however due to that, stock isn’t strong and high quality isn’t uniform. There was a necessity for us to become involved in that. And what additionally helped that call. For those who have a look at the breakdown of market share or market alternative, it’s sometimes 80%-20% between spare components and repair cost.”
Mecho Autotech secured a accomplice in Tokyo-based enterprise capital agency World Mind Company to assist its new path of managing the importation and distribution of aftersales spare components. Based on Owoade, World Mind Company, one of many startup’s traders on this spherical, would join Mecho Autotech to Asian aftermarket components makers all for supplying the African market.
“We see a big alternative within the progress of the automotive aftersales market in Nigeria,” Hiroto Sorita, the agency’s company director, mentioned of the funding. “World Mind will assist Mecho on components procurement from Asian suppliers and enterprise improvement for the brand new companies 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 components stock to over 150 components distributors, whose distribution community will meet the calls for of workshop house owners and finish prospects. This can forestall stockpiling in-demand spare components like tires, suspension components, brakes and batteries.
Consequently, Mecho Autotech’s foray into wholesale aftersales spare components overcomes the stock downside that components sellers confront. In the meantime, these distributors additionally battle with stock finance considerations arising from enterprise shoppers who pay a number of days or perhaps 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 components, Owoade mentioned. Equally, a separate app for company fleet house owners will enable them to search out permitted workshops, obtain upkeep finance and handle car upkeep knowledge.
“We’re nonetheless connecting people and fleets with car repairs and upkeep workshops. Now that we’ve entered the spare components worth chain, we see a chance to attach it with the unique enterprise by producing demand for spare components from components distributors by way of the app,” remarked the CEO.
“We additionally see the app as a device for workshops to buy spare components and immediately entry working capital financing. Because the variety of workshops on the community grows, we will upsell and push customers’ 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 achievement companies.”
Mecho Autotech will accumulate knowledge on spare components 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 components procurement for company fleet house owners), in line 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 line with the CEO.
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