Mecho Autotech, a Nigerian startup specializing in automotive spare parts, vehicle repairs, and maintenance services, recently secured a $2.4 million pre-Series A funding round. The company focuses its efforts on the Nigerian market, where the majority of the over 12 million registered vehicles require regular maintenance to avoid frequent breakdowns.
Mecho Autotech’s Core Business and Market Challenges
Mecho Autotech’s core business revolves around connecting vehicle owners, whether private individuals or fleet operators, with workshops that handle repairs and maintenance. In Nigeria, retail consumers typically have three options for car repairs: using OEM mechanics, spare parts mechanics, or roadside mechanics. While OEM technicians offer high-quality services, they come at a higher cost. On the other hand, spare parts and roadside technicians offer more affordable options, albeit potentially with lower quality.
The Journey and Expansion Plans of Mecho Autotech
Since its inception in 2021, Mecho Autotech has facilitated the repair and maintenance of over 6,000 vehicles for both B2B and B2C customers through a network of more than 110 approved workshops, three of which are owned by the company itself. The company’s CEO, Olusegun Owoade, revealed that the main challenge faced during these repair and maintenance requests has been sourcing quality spare parts. A portion of their initial funding has been allocated to expanding their post-sale spare parts value chain distribution.
Challenges in the Automotive Spare Parts Supply Chain
The automotive spare parts and maintenance market in Nigeria was estimated at $8 billion, with spare parts accounting for 80% of the value. Nigerian vehicle owners typically spend an average of $650 annually on repairs and maintenance. However, the industry is highly fragmented and informal, with a disjointed spare parts supply chain. Recognizing the need for improvements in this area, Mecho Autotech decided to venture into wholesale distribution of spare parts to address these issues.
Mecho Autotech’s Approach to Wholesale Spare Parts Distribution
Mecho Autotech aims to address the challenges in the spare parts supply chain by becoming an importer and providing spare parts stock to over 150 parts suppliers. By offering a reliable distribution network, Mecho Autotech ensures that workshop owners and end customers have access to the spare parts they need without stock issues or delays. The company’s foray into wholesale post-sale spare parts overcomes the inventory problem faced by spare parts retailers while addressing inventory financing issues.
Strategic Partnership with Global Brain Corporation
To support its new path of managing spare parts import and distribution, Mecho Autotech secured a partnership with Tokyo-based venture capital firm Global Brain Corporation. As one of the startup’s investors, Global Brain Corporation will connect Mecho Autotech with Asian spare parts manufacturers interested in supplying the African market. This partnership opens significant growth opportunities in Nigeria’s automotive aftermarket. By leveraging the network and expertise of Global Brain Corporation, Mecho Autotech can access a wider range of spare parts suppliers and expand its market presence.
Investors Backing the Venture
In addition to Global Brain Corporation, Ventures Platform and the Uncovered Fund are also investors involved in Mecho Autotech’s pre-Series A funding round. These investors recognize the growth potential of Nigeria’s automotive spare parts industry and see value in supporting a company like Mecho Autotech, which aims to streamline the supply chain and improve the quality and availability of spare parts.
Inventory Management Solutions for Spare Parts Suppliers
One of the key challenges faced by spare parts suppliers is inventory management. Mecho Autotech plans to develop an app that will facilitate inventory management for spare parts suppliers, allowing them to track their stock, receive inventory financing, and manage their sales. This solution will help address storage issues and ensure that suppliers have access to the financial resources needed to replenish their inventory. By providing this service, Mecho Autotech aims to support and strengthen the spare parts supply chain in Nigeria.
In Conclusion
Mecho Autotech’s recent funding round and expansion into wholesale spare parts distribution demonstrate the company’s commitment to improving Nigeria’s automotive spare parts industry. By addressing challenges in the supply chain and providing customized apps for various stakeholders, Mecho Autotech aims to streamline the process of obtaining quality repairs and maintenance for vehicle owners in Nigeria. With the support of investors and strategic partnerships, Mecho Autotech is poised to make a significant impact on the market and drive positive changes in the industry.
