Underpinning an expanding middle-class among young Nigerians, automobile e-commerce companies have sprung up all over Nigeria to cater to their needs, making close to 150 per cent in profits, a survey by Technext has found.
What are automobile e-commerce companies?
With a large percentage of Nigerians opting for used cars (in 2020 under 8,000 new cars were sold in the country according to Car Sales Base) these companies have built their businesses listing used cars on their website to be delivered to customers in their homes, meeting young Nigerians where they are.
With the increasing surge of home delivery services (Kwik, Eden, EzWashnDry Laundromat) among the zoom class, millennials don’t see why their cars cannot be delivered to them even when they are brand new.
The price that millennials will pay for this strange addiction to comfort that has hijacked the culture of in-person shopping is still unravelling. But we can add up to 150 per cent interest on used cars to the list.
Depending on the quality of the car, they make up to 150%.
Results from Technext’ survey
A former staff of Cars45 who was granted anonymity confirmed that the company indeed made 150 per cent in car sales when they were at the company.
The survey also revealed that cars sold by automobile e-commerce companies were significantly higher than regular car dealers.
For instance, the 2007 Toyota Camry is currently priced at ₦2 million to ₦3.4 million by regular in-person car dealers, for what industry experts call a “grade-A used car.” Prices for the same car on the automobile e-commerce companies’ websites start from ₦3.5 million, going up to ₦9.7 million.
The used 2005 Toyota Corolla on regular car dealers goes from ₦1.3 million to ₦2 million. On the automobile e-commerce companies’ websites, they are priced between ₦2.5 million to ₦3.5 million.
The used 2005 Honda Accord on regular car dealers is currently being sold between ₦800,000 to ₦1.2 million on average. While the e-commerce platforms list them between ₦1 million to ₦1.6 million. Cars45 lists it between ₦1 million to ₦1.7 million on an average. AutoChek lists it between ₦1.4 million to ₦1.5 million. BetaCar list it at ₦2.9 million.
Cars45, BetaCars and AutoChek were all reached out to by Technext. At the time of reporting they all hadn’t responded.
In a seperate poll carried out by Technext on millennial Nigerians with a steady stream of income, 85 per cent of respondents say they will rather buy a car in person for a lesser amount.
But, the price tags by these automobile e-commerce companies and their visibility from digital marketing is already creating a seismic shift in the car dealing industry, skyrocketing prices to meet new market standards.
The exorbitant rates are usually above market value, so, many median earning young Nigerians might not even be able to afford to buy cars from these companies or the dealers in a few years, even when they have instalment payment plans.
AutoChek, for instance, has flexible payment options for customers who would rather not pay for the car outright. On the platform, listing starts at 200,000 to over 500,000 per month. And, when you compare that with the monthly earnings of the average young Nigerian – 80,000 to 250,000 per month – affordability stays a huge problem.
What does rising car prices mean for the ecosystem?
Over the years, as prices for used cars have gone up, the prices of new cars have also gone higher, drastically reducing their sales. In 2017 for instance, almost 33,000 new cars were sold. By 2019, less than 10,000 new cars were sold, a review by Car Sales Base shows.
When respondents were asked if they would consider purchasing a car from the automobile online marketplace, they insisted that if the dealers are offering the best offers, they will go for that.
In an interview with TechCabal last year, AutoChek CEO, Etop Ikpe said that 90 per cent of their vehicles “are imported into the country of sale,” responsible for their high prices, even though nearly all cars in Nigeria are imported.
But this didn’t faze 85 per cent of the Technext poll responders.
“Everybody would say theirs is more trusted. Unless they give me a reason that I can’t dispute,” Justina Ezeami, who works at a non-profit in Lagos said, adding that she will rather go for the dealers.
“If the marketplace company is higher by about 5 or 10% and has good warranty agreements, I will patronise the marketplace companies,” Moyo, who works as a freelance content writer in Abuja said.
“People who buy cars at such an exorbitant price are either very rich, fraudsters or fake people who are broke but need to look the part,” Onyinye, a tech writer in Lagos said.
But, not all online automobile e-commerce companies are priced above market value.
Tokunbo Cars which has partnered with major banks including UBA, Zenith, and GTB, on their website is clear about the damages that the cars listed have, and has most of its car prices consistent with market value. The platform lists the 2007 Toyota Camry at 3 million and below.
Its important to note that Tokunbo Cars has a very different business model and is only one of many. If the prices remain higher, even for used cars, in the long run, young Nigerians will likely be unable to own cars in the early stages of their careers.
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