Mecho Autotech, a startup specializing in automotive spare parts, vehicle repairs, and maintenance services, has recently completed a successful pre-Series A funding round, securing $2.4 million in investment. The company’s primary focus is on the Nigerian market, where more than 90% of the country’s 12 million registered vehicles, primarily used ones, require regular maintenance to prevent recurring breakdowns.
At the heart of Mecho Autotech’s business model is the connection between vehicle owners, including individuals and fleet operators, and workshops that handle vehicle repairs and maintenance. In Nigeria, consumers typically have three options for automotive repairs: utilizing OEM (Original Equipment Manufacturer) mechanics, aftermarket mechanics, or roadside mechanics. While OEM technicians offer high-quality but expensive services, aftermarket and roadside technicians are more budget-friendly but often provide lower quality services.
Since its establishment in 2021, Mecho Autotech has facilitated the repair and maintenance of over 6,000 vehicles, serving both B2B and B2C clients through a network of more than 110 approved workshops, including three owned by the company. CEO Olusegun Owoade has highlighted that their main challenge has been sourcing quality replacement parts.
Mecho Autotech previously announced that a portion of its seed funding would go towards expanding its after-sales spare parts value chain. Additionally, the company plans to improve its wholesale distribution of these parts with the current pre-Series A investment.
The automotive aftermarket spare parts and maintenance industry in Nigeria is estimated to be valued at $8 billion, with spare parts making up 80% of this value. Nigerian vehicle owners typically spend an average of $650 annually on maintenance. However, the industry is highly fragmented and informal, with most businesses involved in spare parts being small and lacking uniform quality and robust inventory.
To address these challenges, Mecho Autotech has formed a partnership with Global Brain Corporation, a Tokyo-based venture capital firm and one of its investors in this funding round. This partnership will enable Mecho Autotech to connect with Asian aftermarket parts manufacturers interested in supplying the African market.
Mecho Autotech will serve as an importer, providing spare parts inventory to over 150 parts vendors, who will, in turn, cater to the needs of workshop owners and end customers. This approach aims to prevent the stockpiling of in-demand spare parts such as tires, suspension components, brakes, and batteries.
In the fourth quarter of 2023, Mecho Autotech plans to launch an app that will empower vendors to access inventory finance and manage their inventory sales. The same app will also assist workshops in obtaining working capital and procuring spare parts. Additionally, a separate app designed for corporate fleet owners will help them locate approved workshops, secure maintenance financing, and manage vehicle maintenance data.
By collecting data on spare parts demand through these individual applications, Mecho Autotech will be able to assess market supply. Supply chain stakeholders, including vendors, workshop owners, and fleet operators, will have access to up to ₦10 million (~$10,380) in financing, facilitated through bank partnerships.
Mecho Autotech’s primary sources of revenue come from commissions on vehicle repairs and supplementary earnings from maintenance subscriptions. The company is presently in negotiations with other banks to expand its credit line, having already secured access to ₦650 million (~$675,270) through a single bank partnership.
