Mecho Autotech, a startup specializing in automotive spare parts, vehicle repairs, and maintenance services, has successfully raised $2.4 million in a pre-Series A round of funding. The company focuses on the Nigerian market, where the majority of the country’s more than 12 million registered cars require regular maintenance to prevent recurring breakdowns.
Key Takeaway
Mecho Autotech has secured $2.4 million in funding to expand its operations in the Nigerian automotive spare parts and maintenance market. By venturing into wholesale spare parts distribution, the company aims to overcome the challenges caused by the highly fragmented aftermarket spare parts supply chain. With the help of innovative apps, Mecho Autotech plans to connect vendors and workshops with customers and streamline inventory management, effectively serving the growing demand for vehicle repairs and maintenance in Nigeria.
Meeting the Demand for Vehicle Repairs and Maintenance
Mecho Autotech’s primary business model involves connecting vehicle owners, including individuals and fleet owners, with approved workshops that handle vehicle repairs and maintenance. In Nigeria, customers typically have three options for automobile repairs: OEM mechanics, aftermarket mechanics, or roadside mechanics. While OEM technicians provide high-quality services, they can be quite expensive. On the other hand, aftermarket and roadside technicians offer more affordable services but with potentially lower quality.
Since its establishment in 2021, Mecho Autotech has serviced over 6,000 cars from both B2B and B2C clients, partnering with more than 110 approved workshops, three of which the company owns. However, CEO Olusegun Owoade revealed that acquiring quality replacement parts has been a challenge for the company.
Expanding into Wholesale Spare Parts Distribution
Recognizing the massive potential in Nigeria’s automotive aftermarket spare parts and maintenance industry, estimated to be worth $8 billion, Mecho Autotech plans to grow its after-sales spare parts value chain. With spare parts accounting for 80% of the industry’s value, Nigerian vehicle owners spend an average of $650 per year on parts. However, the industry is highly fragmented and informal, resulting in a disjointed aftermarket spare parts supply chain.
Mecho Autotech has partnered with Tokyo-based venture capital firm Global Brain Corporation to manage the importation and distribution of aftermarket spare parts. Global Brain Corporation will connect Mecho Autotech with Asian suppliers interested in supplying the African market, helping the company penetrate the fragmented Nigerian market.
Mecho Autotech will act as an importer, supplying spare parts inventory to over 150 parts vendors, whose distribution network will cater to the demands of workshop owners and end customers. This approach will overcome inventory challenges faced by parts dealers and provide more efficient stock management for in-demand parts like tires, suspension parts, brakes, and batteries.
Innovative Apps to Support the After-Sales and Maintenance Market
To facilitate its expansion into wholesale aftersales spare parts, Mecho Autotech will develop an app in Q4 2023. This app will allow vendors to receive inventory financing and manage their inventory sales. Additionally, workshops will have access to working capital and the ability to acquire spare parts. Another app targeted at corporate fleet owners will help them find approved workshops, receive maintenance financing, and manage vehicle maintenance data.
Mecho Autotech aims to generate demand for spare parts from vendors through this app and connect it with its existing business of connecting individuals and fleets with repair and maintenance workshops. The company also offers free software for fleet owners to manage end-to-end operations efficiently.
