Miko Autotec, a startup that provides auto parts, vehicle repair and maintenance services, has raised a pre-Series A round of $2.4 million. The company targets the Nigerian market, where 90% of the country is located More than 12 million cars registered (Mainly used) Requires regular maintenance to avoid frequent breakdowns.
The core company works to connect vehicle owners (individuals and fleet owners) with workshops that undertake vehicle repair and maintenance. Retail consumers in Nigeria often have three alternatives for doing car repairs: using OEM mechanics, aftermarket mechanics, or roadside mechanics. Because auto parts are manufactured in-house, OEM technicians provide high-quality but expensive services. On the other hand, most car owners can afford after-sales services and roadside technicians, which are of lower quality.
Since its inception in 2021, Mecho Autotech has seen over 6,000 vehicles from B2B and B2C customers undergo repair and maintenance at over 110 authorized workshops (of which it owns three). In the process, the majority of problems the company faced in executing these repair and maintenance orders came from sourcing quality spare parts, CEO Olusegun Owode said in an interview.
Mecho Autotech said last January that part of its seed funding would be used to grow its aftermarket parts value chain. Likewise, the company will double the wholesale distribution of these parts through its existing pre-Series A investment.
Expanding the wholesale distribution of spare parts
Automotive aftermarket spare parts and maintenance business in Nigeria is Its value is estimated at $8 billion. Spare parts account for 80% of the value, with Nigerian vehicle owners paying an average of $650 per year. With over 12 million registered vehicles, 90% of which are imported and pre-owned, Nigeria’s automotive aftermarket industry is fragmented and largely informal. This results in a disjointed aftermarket parts supply chain.
“As you know, spare parts are imported into the country as we do not have any local manufacturing. Ouwadi said that more than 95% of companies operating in this spare parts value chain are small and informal, lacking technical knowledge and distribution channels.
“But because of their size, they are coming together to import spare parts into the country, but because of that, the inventory is not strong and the quality is not uniform. There was a need for us to participate in that. And what also helped in making this decision. If you look at the details of market share or Market opportunities, you will usually find between 80% and 20% between parts and service fees.
Mecho Autotech has secured a partner in Tokyo-based venture capital firm Global Brain Corporation to support its new path to managing the import and distribution of aftermarket parts. According to Owoade, Global Brain Corporation, one of the startup’s investors in this round, will connect Mecho Autotech with Asian aftermarket parts makers interested in supplying the African market.
“We see a huge opportunity in the growth of the automotive aftermarket market in Nigeria,” Hiroto Sorita, the company’s director, said of the investment. “Global Brain will support Mecho in purchasing spare parts from Asian suppliers and business development for new services to penetrate this fragmented market.”
Ventures Platform and Uncovered Fund are the other investors participating in the round.
Applications specifically designed for the aftermarket supply chain and maintenance market
The two-year-old company, which operates across Nigeria, will act as an importer, supplying spare parts inventory to over 150 spare parts vendors, where their distribution network will cater to the requirements of workshop owners and end customers. This will prevent storage of required spare parts such as tires, suspension parts, brakes and batteries.
As a result, Mecho Autotech’s foray into wholesale aftermarket parts overcomes the inventory problem faced by parts dealers. At the same time, these vendors also suffer from inventory financing concerns arising from business customers who pay several days or weeks after the service is completed.
Therefore, Mecho Autotech will develop an application in Q4 2023 that will allow sellers to receive inventory financing and manage their inventory sales; The same service will enable workshops to access working capital and obtain spare parts, Awuade said. Likewise, a separate app for corporate fleet owners will allow them to find approved workshops, receive maintenance financing and manage vehicle maintenance data.
“We still connect individuals and fleets with vehicle repair and maintenance workshops. Now that we are entering the spare parts value chain, we see an opportunity to connect them to the original business by generating demand for spare parts from spare parts sellers via the app.
“We also see the app as a tool for workshops to purchase spare parts and directly access working capital financing. As the number of workshops on the network increases, we can increase sales and drive consumers’ car repair needs to them. We have also developed free software for fleet owners to manage end-to-end operations, including This includes vision, maintenance and implementation services.
Mecho Autotech will collect data on spare parts demand from these individual applications appropriate to various stakeholders in the supply chain to assess market supply. Supply chain stakeholders will have access to up to 10 million yen (~US$10,380) in financing (inventory financing for vendors, working capital for workshop owners and vehicle maintenance and parts procurement for corporate fleet owners), according to the startup.
Awwadi pointed out that the source of funding comes through banking partnerships. Mecho Autotech currently has access to a credit line of JPY650 million (about US$675,270) from a single bank partnership. The company, whose main revenue comes from vehicle repair commissions and additional revenue from maintenance subscriptions, is in talks with other banks to increase its credit limit, according to the CEO.