Approximately 1.5 million cars are sold annually in Nigeria and, of this, just 2% are new vehicles where the manufacturer (e.g. Toyota, Nissan) offers after-sales service and maintenance. In Ghana, the ratio is similar.
For the other 98% of consumers, says Etop Ikpe, CEO of Autochek, formalised financing, standardised servicing and access to an accredited process to determine the value of the vehicles, are severely lacking.
This is the pain point and problem statement that Autochek wants to solve in these markets and beyond.
Ikpe is no stranger to digitising both customer experiences and informal markets. He has had plenty of experience; from establishing Three Stitches – an e-commerce fashion store – and running DealDey to joining Sim Shagaya’s Konga.com team before founding Cars45, currently Nigeria’s leading automotive trading platform.
Earlier this year, Ikpe left Cars45, causing much speculation about the next step on his entrepreneurial journey, until the news broke in September that he founded a new company, called Autochek, that had acquired car marketplaces Cheki Nigeria and Cheki Ghana from Ringier One Africa Media.
Explaining the move, Ikpe maintains Cars45 had been built to a point where the business could continue growing with the management team that was in place. There was a more challenging pain point beckoning, hence the new venture.
The acquisition of Cheki immediately provided Autochek with a large customer base. “It has given us a huge push into the market and helped on the supply and demand side,” Ikpe notes.
Linking a fragmented value chain
Due to its fragmented nature, Ikpe believes there is still a lot of untapped opportunity in the automotive industry in Africa.
In structured automotive markets, the different stages of the vehicle lifecycle work together. A customer is tied into a value chain comprising financing, sales and after-sales or maintenance. In the markets where Autochek has a presence, this is not the case.
“Because a large percentage of the volume is in the used-vehicle section, most of the automotive lifecycle happens in the informal sector,” he explains.
A customer in Nigeria and Ghana, wanting to buy a used vehicle, will usually struggle to find formal financing. Often the available vehicles don’t have a proper service history or a standardised way to determine their value. This makes it risky for banks to provide finance. Furthermore, the maintenance industry is largely disconnected from the trading industry; once the car is sold, the customer does not have a clear idea of where the vehicle should be taken for its services.
“Some customers are lucky and find a maintenance provider they are happy with after two or three attempts, but it does mean their asset depreciates faster than necessary.”
Autochek provides a one-stop-shop for the consumer to identify the desired vehicle, acquire finance and access a list of trusted maintenance workshops.
Two months after launching, Autochek is already working with 10 financial institutions in Nigeria, as well as two in Ghana. It has 70 dealerships and workshops integrated into the system with 80 more currently in the incubation phase.
Autochek provides the technology that its service partners require to streamline the entire customer journey and conclude transactions more efficiently.
“At the back end, we have built specific solutions for maintenance workshops to give them more visibility and efficiency. We provide solutions to dealerships to conduct condition analysis of the cars and give them access to CRM and lead management. We present financial institutions with solutions that give them a 360-degree overview of the condition and residual value of the car. All of this is merged with customer intelligence from our platform,” Ikpe reveals.
On average, getting approval for vehicle financing in Nigeria was around 30 days. “With the solutions we provide, Autochek has shortened that to 24 hours.”
Using lessons learnt to build a new solution
“When people look at the African continent, they often see a lot of problems. I see the chance to create solutions to those problems,” he says.
Covid-19 has accelerated the need for Autochek’s offering because people are increasingly looking for contactless solutions.
A lesson Ikpe has learnt over the years – and one he applies in any new business – is the importance of product and market fit. If a business has to offer a discount to get its product adopted in the market, there is an issue. “You could get stuck in a cycle that is difficult to break out of and make a profit,” he says.
“If you can’t offer a product that people are willing to pay money for, you should rather spend more time on getting the fit right.”
Another lesson which has guided the process behind establishing Autochek is that entrepreneurs should consider the entire value chain when they are looking at opportunities in Africa. A business that wants to establish a marketplace must consider how it is going to support the different players in the ecosystem where its primary business model operates, otherwise the venture will not work, he adds.
At Autochek one of the main mantras is ‘partner prosperity’. “You cannot have an exploitative approach when building marketplaces. It might benefit you in the short term, but it will eventually get channelled back to you through customer experiences.”
Taking the solution pan-African
While Autochek, for now, wants to ensure it adds even more workshops and dealerships to its platform to drive availability for consumers, Ikpe has clear pan-African ambitions.
“We want to be in every viable market out there. I think our solution is needed in most African markets where you have a strong internet penetration,” he says.