Nigeria's automotive after-sales spare parts and maintenance market is estimated to be $8 billion; spare parts account for 80% of the value with Nigerian vehicle owners spending an estimated $650 annually.
With over 12 million registered vehicles of which 90% are imported and pre-owned, the automotive after-sales industry in Nigeria is highly fragmented and informal. This results in a disjointed aftermarket spare parts supply chain.
Founded by Olusegun Owoade and Godwin Asuelimen in April 2021, Mecho Autotech (“Mecho”) is a Nigerian multi-channel platform providing quality automotive spare parts and vehicle repairs and maintenance services. “We created a network of vetted technicians across 35 states out in Nigeria to tackle the poor vehicle maintenance culture in Nigeria,” says Owoade.
The YC-backed mobility startup announced today that it has secured $2.4 million in a pre-Series A round with participation from Global Brain Corporation, Ventures Platform, and Uncovered Fund. This investment will enable Mecho to launch a B2B distribution platform for aftermarket spare parts, which reportedly account for 80% of Nigeria’s $8 billion automotive industry.
According to a statement shared with Bendada.com, the company says it will leverage its existing partnership with Asian aftermarket spare parts manufacturers to provide spare parts to vendors and workshop owners at an affordable rate. Mecho believes that this will increase the availability of high-demand spare parts like tires, suspension parts, brakes, and batteries. “By solving for spare parts stockouts, we can help solve one of the biggest problems in our industry,” according to Olusegun Owoade, co-founder and CEO at Mecho Autotech.
In partnership with local banks, Mecho will also offer credit up to 10 million naira to automotive supply chain players, including inventory financing (vendors), working capital (workshop owners), and financing for vehicle maintenance and parts procurement (corporate fleet owners).
“In our original business model, our core focus was on vehicle maintenance and repair. But we soon realized a much larger issue—there was an extreme scarcity of high-quality spare parts in the market. Spare parts vendors face frequent stockouts and struggle to access inventory financing. In our marketplace, vendors can source inventory from leading aftermarket spare parts manufacturers and access credit,” Owoade added.
Mecho will collect data on spare parts demand through its separate apps tailored to supply chain players, so as to gauge supply in the market. The Nigerian mobility startup wants to launch an app for corporate fleet owners at the end of this quarter: This will allow these car owners to discover vetted workshops, access maintenance financing, and manage vehicle maintenance data.
Mecho will also launch an app for spare parts vendors and workshop owners by the end of December. Workshops will be able to procure spare parts and access working capital. Parts vendors can access inventory financing and manage their inventory sales.
According to Dotun Olowoporoku, general partner at Ventures Platform; “Mecho's vision of driving efficiency in the automotive spare parts supply chain through technology and financing aligns perfectly with our market-creating thesis. We are confident in the team's ability to create significant positive change within the sector and make quality spare parts more accessible for vehicle owners and workshop operators across Nigeria.”
As of February 2022, Mecho had 40 B2B customers who own over 20,000 vehicles, and it has serviced over 2,000 of the vehicles. It has onboarded more than 7,000 third-party mechanics across over three workshops in Lagos servicing B2B customers: Shuttlers, Moove, Tolaram Group, and Kobo360.
Last year, Mecho raised $2.15 million seed to expand vehicle maintenance and repair services. A year before its seed, the startup received an undisclosed amount of pre-seed investment from Ingressive Capital, Ventures Platform, Tekedia Capital Investment, and Mono's CEO Abdul Hassan. The startup also participated in the Y Combinator Summer 2021 batch; based on the accelerator's standard deal, the received a cheque of $500,000.
The latest investment has brought the company's total VC funding to at least $4.55 million, according to BD Funding Tracker.