Russia’s invasion of Ukraine brings the risk of serious macroeconomic impacts: a slowing of economic growth, even higher inflation, possibly even stagflation, rising unemployment and falling consumer confidence.
Vehicle financing is one of the socio-economic impacts of the war. Since the pandemic started, the cost of both new and used vehicles has shot up as supply-chain problems, and COVID-19 outbreaks hobbled car production worldwide. Over the last 12 months, the average price of a new vehicle rose 12%, while used-car prices shot up 41%.
“Demand for vehicles fail during the COVID-19 pandemic, and there was a deep in the production of new cars due to unavailability of semiconductor chips. All of these affected the supply chain, and the effect of the pandemic will spill over to this war,” Olajide Adamolekun, the Chief Financial Officer at Autochek Africa told Benjamindada.com.
The war could encourage the already expensive car prices and shortage of semi-conductor chips to continue skyrocketing which affects Africans who already struggle to access funds needed to purchase cars for their businesses and personal use.
Russia’s invasion of Ukraine is sending shockwaves through the global economy as retaliating sanctions and war disrupt already-battered supply chains. In March, nearly a dozen global automakers had suspended business in Russia, and some closed down their factories indefinitely, including; Toyota Motor, Ford Motor Co., Hyundai Motor Co. and HYMLY Ltd.
Between 2015 and 2018, Brookings said, the European Union, Japan, and the United States exported 14 million used vehicles worldwide—40 per cent of which went to African countries due to the low prices of these vehicles, which creates high demands in African and other developing regions.
Adamolekun said, “once there is a challenge with new cars, it affects the supply of used cars—more than 95% of vehicles in sub-Saharan Africa are used cars. Financing used vehicles is quite dicey, because of the condition, value and maintenance of assets.”
What’s Autochek’s solution?
However, Autochek auto loan services platform offers a variety of financing options from over 70 banks, with attractive terms that could help suppress this impact. Aside from the provision of loans, the mobility startup ensures that the vehicles are in good condition and are maintained all through the period of the loan.
In emerging markets like Brazil, India, Indonesia, Malaysia, and large parts of Latin America, you find the average of institutional credit in automotive transactions—how many people buy a car through the use of loans— at about 65% to 70%, but it is less than 2% across most parts of sub-Saharan Africa.
Africa’s GDP per capita is sub $2,000, and the average car price is about $5,000. It’s then that you realise that sub-Saharan Africa needs credit. Hence the need for mobility startups like Autochek who are powering vehicle financing on the continent.
Launched in 2020, Autochek began operations in Nigeria, and thereafter it expanded to Ghana, Uganda, Kenya and Cote d’Ivoire. Autochek is an automotive technology company that leverages technology, data, knowledge, and experience to provide affordable car loans to buyers and sellers.
It also provides them with quality maintenance and after-sales services. In just over a year of operation, it has built a partner network of over 1,200 workshops and dealers, and over 70 financial institutions on the platform approving and disbursing car loans across Africa.
With shifting consumer demands, the Autochek platform is building on partnership opportunities with automotive manufacturers and financiers, to innovatively provide a more agile, tech-led approach to delivering options.
Despite their efforts, Autochek’s CEO Etop Ikpe in a separate interview said that the increase in the value of foreign currencies increases the prices of cars. Unfortunately, the income of various customers does not, thereby making affordability difficult.
A majority of the African population has limited or no access to vehicle financing. In fact, the continent has the lowest per capita vehicle ownership in the world. In 2019, Africa had fewer than 900,000 new vehicle sales. The U.S. sold more than 17 million new cars that same year.
With Autochek, Africans can easily visit the startup’s website to select a vehicle and start the loan registration process. After credit assessments by the banking partners, the vehicle will now be made available for pick up.