Mecho Autotech gets $2.15 million to expand vehicle maintenance and repair services in Nigeria – TechCrunch

Startups

Nigeria has more than 12 million registered vehicles and about 90% of these are used cars that need to be checked regularly to prevent recurring breakdowns.

Given this number, you would expect effective vehicle maintenance to be standard in Nigeria† But that is not the case: Most service providers in the country, mostly auto mechanics, are: inadequate trained and lack the necessary tools to provide a consistent, quality service.

A number of startups such as Mecho Autotech supported by Y Combinator are starting to digitize this process. The company that connects car owners with quality auto repair and maintenance companies have raised a $2.15 million seed round.

The company said in a statement it will use the capital “to expand its multi-channel service capability, engineering team and marketing budget for B2C acquisition.”

In Nigeria, private customers typical have three options for performing vehicle repairs: using original manufacturer mechanics (OEM), semi-organized or aftermarket mechanics, or roadside mechanics. There are very few OEM mechanics like Elizade and Toyota. They provide high-quality but expensive services because auto parts are manufactured in-house. On the other hand, the aftermarket and roadside mechanic services are quite affordable for most vehicle owners, although the quality varies; most of the time it tilts towards the flawed end.

Founded by Olusegun Owoade and Ayoola Akinkunmi, Mecho Autotech has created a network of vetted internal and external assemblers with customer affordability (from corporate and retail customers) in mind, Owoade told TechCrunch. “So what we did was create a network of vetted technicians across 35 states in Nigeria to address the poor vehicle maintenance culture in Nigeria,” he said.

“We have also created an insurance plan because we know that car insurance is mandatory. So if we have an insurance plan that has an annual maintenance plan built in, it more or less replaces the after sales package people with brand new vehicles typical to get.”

After-sales packages are automated maintenance plans for new cars. But in a country where most people buy used cars and hit the road with little or no attention to maintenance – causing repair and safety problems in the long run – Mecho Autotech’s proposal is attractive.

Owoade, a consultant for most of his professional career, noticed this issue during his time at the pan-African transportation company Kobo360 as Chief Risk Officer. Therehe created a platform to track incidents including: law enforcement officers, arrests and accidents. But from data Owoade collected, more than 90% of the incidents reported on the platform were due to a mechanical failure.

“I became very I was interested in the problem to try to understand why, and then I narrowed that down to three main things: quality of the mechanics involved, poor vehicle maintenance culture and quality of spare parts. Repairs that would take a few days would take weeks completely

He contacted Akinkunmi, who has 10 years of experience as a car engineer and ran a car maintenance company in Lagos, to start Mecho. They started work on the project in 2019, but didn’t fully launch until April 2021. The company entered the YC Summer 2021 batch and currently works with 40 business-to-business customers who own more than 20,000 vehicles† It has serviced more than 2,000 of these vehicles.

Owoade said Mecho Autotech decided to work with enterprise customers first because it gave the company time to fine-tune its service. He stated that these customers, who own large fleets, typical partner with several workshops and spend more than $30 million on annual vehicle repairs and maintenance. But with Mecho Autotech they have to deal with a single entity that coordinates these workshops for them

To date, the company has employed more than 7,000 remote technicians in three workshops in Lagos serving B2B customers: Shuttlers, Moove, Tolaram Group and Kobo. It charges about 15% commission fee -10% of service fee and 5% of spare parts cost

The company said it is developing a spare parts value chain that has already served more than 100 outside technicians and several major purchases of ticket inventory for B2B customers.

Part of the starting money would go to expand this capacity. It will also help scale Mecho Autotech’s mobile application, which it launched for its B2C customers last month.† The two-year-old startup said it aims to reach 25,000 customers this year and charge them a monthly, quarterly or annual subscription fee.

To achieve this scale, the chief executive said his company has a success-based arrangement in the Google Play Store, where it will shift a pay-per-download model in exchange for the platform pushing Mecho’s app. Another strategy is to use mobile services to meet retail customers at their location if they choose not to go to a Mecho Autotech workshop or partner garages.

“With B2B, what? Is required is a good network of workshops that can meet their needs. And then it’s mobile for B2C. Consumers want convenience, so mobile services work perfect fine for them,” he said

“What we’ve done with mobile is we’ve created subscriptions for things customers would do typical do with their vehicles, such as the routine oil change, oil filters, brake pads and [then] send our technicians to their preferred location in our branded minibus if necessary. In this way we try to structure our offer, aligned with B2B and the B2C side of the company.”

The company said its round was “more than 300% oversubscribed” and claims to be the largest investment to date for a vehicle maintenance startup in sub-Saharan Africa, mainly because Mecho Autotech plays in a niche market with relatively few competitors. Howeverone that comes to mind is Autochek, whose vehicle maintenance services are only one aspect of its comprehensive automotive business.

Investors involved in Mecho’s seed round include Future Africa, HoaQ Capital, Cathexis Ventures, V8 Capital, Silver Squid and Tekedia Capital.

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