Cars: The Missing Billion Dollar Post-Manufacturer

Africa buys more used cars than any other place in the world. These cars have exceeded their warranty terms, and there lies an opportunity.

Africa is the biggest consumer of second-hand cars in the world. Over 80% of car sales on the continent are used cars, and in some regions, like East Africa, 96% of imported cars are second-hand. Demand for used cars in many African countries is soaring due to a growing African middle class and increasing levels of disposable incomes. There is one big problem, in fact a major pain-point, that these car owners face which presents a huge opportunity for you to wrap this tech-startup around and scale it to the unicorn club.

These used cars fall within the age bracket that requires frequent visits to the mechanic for repairs. They have also created a huge demand for motor vehicle spare parts on the continent. Most mechanics in Africa do not undergo a formal schooling system to learn their trade but will still go ahead to set up their garage workshops even when they have limited knowledge about repairing cars. Just ask any car owner in Africa and they will narrate to you tales of the nightmares they have undergone at the hands of rogue mechanics. First, most have no sound knowledge of car systems and have zero troubleshooting skills. Your car may be having a minor malfunction, but they will tamper with its system resulting in further damages that will cost you a heftier bill. Then there are those unethical ones. If you leave your car with them at the garage, they will go behind your back and extract your functioning, genuine, manufacturer installed parts and replace them with non-genuine parts. They will sell your parts to fetch themselves more income. So the current situation is that, it is not advisable to drive your car into just any other garage you come across by the roadside. Some of the tales are so horrifying that car owners have had to adapt to this reality and would rather circuit to the other end of town to a mechanic they have established some trust in and wait to be served no matter how long the queue is. The challenge of sourcing for genuine spare parts only adds to the pain these car owners are already experiencing.

With the help of technology, you want to disrupt this market as a single dominant player. Africa has a large number of young people looking for employment opportunities. This is your first resource. That’s an advantage you cannot find in the developed world. You are going to build the single largest garage in Africa. So big, it will span the entire continent! You will take a mass of African youth. Train them. Then deploy them. These young people (school leavers) are ambitious, creative and so eager to work with technology. You will also take another batch. This time a smaller group. This second batch shall have individuals who are top talented, extra smart, highly skilled and the best in their field. Their workstation shall be called the nerve center/command center. The first batch will be trained in basic skills of mechanics, just capable of handling technician duties. The second batch will be the highly trained experts and will offer technical guidance to the folks in the first batch (technicians). You will select strategic locations around cities, towns and along major highways where you will set up work stations in which your technicians shall be working. There shall be direct communication between the nerve center and these workstations such that experts in the nerve center will use live feed from these work stations to guide the technicians through any kind of procedure. Your bold statement is, no matter the location, if a client takes their car into any of these work stations, no matter how complex the problem is, they be rest assured that it will be resolved.

This will be no ordinary service. It will be a high tech data driven approach. Your stations shall be equipped with troubleshooting tools, sensors and other advanced equipment. Your clients will be able to check-in at any location of your stations as you will maintain a centralized database in which each car’s data and repair history will be stored. Think of it as doctors at any hospital you visit being capable of retrieving your past medical history and using that to help in their diagnosis. So every time a client’s car is brought in for servicing and repair, all the data is captured and the technician who will handle it in a subsequent visit will be able to pull up the car’s data and its repair history to quickly go about troubleshooting a malfunctioning part. Your business model is what makes this deal sweeter.

Introduce a subscription business model. Make it even sweeter. Fuse it with auto-insurance. And undercut the premiums of all insurance players. Drive them out of business as they are another bunch of crooked unethical predators on car owners, rarely compensating them on insurance claims. So car repairs + regular servicing + car insurance becomes an all-inclusive single bundle that they only have to pay once annually or monthly. This is an offer no one can resist. Your clients will no longer have to think about separate costs for repairing their cars, servicing them and paying through the nose for auto-insurance premiums. Even more importantly you will have eliminated the current stress they go through just to fix their cars. Since you will be the largest dealer for motor vehicle spare parts that you will be fixing into your customers’ cars, you will be able to negotiate directly with the manufacturers for the best discounts. You will also have achieved two things: (i) your clients will be assured of genuine spare parts being fixed into their cars and not the fake ones that today have flooded the market, (ii) you will have cut out the middlemen (including the rogue ones that sell fake parts to unsuspecting customers) and then pass on these savings to your customers. The fact that this will be centralized means your clients are constantly guaranteed of finding any spare parts they need unlike the current case where the market is so fragmented with many small dealers and customers have a hard time finding a single shop with all the spare parts they need.

Trust is one of the most important things in business. It is priceless. Used car owners in Africa are ready and willing to pay anything for trust. This market is infested by fake mechanics and fake spare parts. The mechanics operate independently from their small sheds and source these fake parts from behind the streets dealers, costing car owners tremendous losses. It is a paradox that Africa, while having fewer number of cars, has the highest rate of road accidents in the world. This market is ripe for disruption. If there has ever been a business opportunity in Africa where customers will welcome you with open arms then this is it.

Using technology and a data driven approach to solve some challenges in Africa is not a new concept. Have you heard of Bridge International? The tech startup that Bill Gates, Mark Zuckerberg, among others invested in $100 million. Bridge International may be in a different field (education), but their model is exactly the same as this, if you think about your nerve center as equivalent of their office for their team of global curriculum experts (yours are expert auto mechanics/engineers) and your work stations as equivalent of their schools where their teachers (akin to your technicians) carry out lessons as transmitted from their experts.

If there is technology for remote surgery (telesurgery) where doctors can perform an operation from halfway round the world on a patient (a human being), why not for cars? In medicine they involve robots, but in this case, human labor is so cheap in Africa and humans (technicians) will do a more fantastic job.

This is a complex challenge that you can manage to pull off. Let’s now explore how you can go about executing this into reality.

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