Mecho Autotech, a startup providing automotive spare components, automobile repairs and upkeep providers, has raised a $2.4 million pre-Collection 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 automobile house owners (people and fleet house owners) with workshops that deal with automobile repairs and upkeep. Retail customers in Nigeria typically have three options for performing vehicle repairs: make the most of OEM mechanics, aftermarket mechanics, or roadside mechanics. As a result of vehicle components are made in-house, OEM technicians present high-quality however dear providers. Alternatively, most automotive 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 purchasers bear repairs and upkeep from over 110 authorized 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 keeping with CEO Olusegun Owoade in an interview.
Mecho Autotech stated final January {that a} portion of its seed funding will probably 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-Collection 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 automobile house owners paying a mean of $650 yearly. With over 12 million registered automobiles, of which 90% are imported and pre-owned, the automotive after-sales trade in Nigeria is extremely fragmented and casual. This leads to a disjointed aftermarket spare components provide chain.
“As , spare components are imported into the nation as now we 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 components to the nation, however due to that, stock is just not strong and high quality isn’t uniform. There was a necessity for us to get entangled in that. And what additionally helped that call. When you take a look at the breakdown of market share or market alternative, it’s usually 80%-20% between spare components and repair cost.”
Mecho Autotech secured a companion in Tokyo-based enterprise capital agency World Mind Company to help its new path of managing the importation and distribution of aftersales spare components. In line with Owoade, World Mind Company, one of many startup’s traders on this spherical, would join Mecho Autotech to Asian aftermarket components makers keen on supplying the African market.
“We see a major alternative within the progress of the automotive aftersales market in Nigeria,” Hiroto Sorita, the agency’s company director, stated of the funding. “World Mind will help Mecho on components procurement from Asian suppliers and enterprise improvement 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 components stock to over 150 components distributors, whose distribution community will meet the calls for of workshop house owners and finish prospects. It will 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 issues arising from enterprise purchasers 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 autumn 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 stated. Equally, a separate app for company fleet house owners will permit them to seek out authorized workshops, obtain upkeep finance and handle automobile upkeep knowledge.
“We’re nonetheless connecting people and fleets with automobile 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 who based the startup with Ayoola Akinkunmi.
“We additionally see the app as a software for workshops to buy spare components and instantly entry working capital financing. Because the variety of workshops on the community grows, we will upsell and push customers’ want for automotive 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 providers.”
Mecho Autotech will acquire knowledge on spare components demand from these particular person purposes 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 automobile upkeep and components procurement for company fleet house owners), in keeping with the startup.
Owoade famous that the supply of the financing is by way of financial institution partnerships; Mecho Autotech at present 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 automobile repairs and ancillary revenues from upkeep subscriptions, is in talks with different banks to extend its line of credit score, in keeping with the CEO.
