Nigerian startup Mecho Autotech has raised $2.4 million in pre-series A round to expand into wholesale spare parts distribution. The company provides quality automotive spare parts, vehicle repairs, and maintenance services.
The funding was backed by Global Brain Corporation, Ventures Platform, and Uncovered Fund. According to Tech Cabal, the fund will be used to launch a B2B spare parts distribution platform. This will be done in partnership with local banks and about $12,428 will be offered to finance automotive supply chain players. The idea behind it is to create a platform for aftermarket spare parts and maintenance business which is estimated to be worth $8 billion.
Spare parts reportedly account for 80 percent of the value. Also, car owners in Nigeria pay an average of $650 annually. Of the over 12 million registered vehicles in Nigeria, 90 percent are imported and pre-owned, according to data. This makes the automotive after-sales industry in Nigeria highly fragmented and informal, resulting in a disjointed aftermarket spare parts supply chain.
“We see a significant opportunity in the growth of the automotive aftersales market in Nigeria,” Hiroto Sorita, Global Brain Corporation Director, said about the investment. “Mecho is led by a strong entrepreneur and team with vast industry experience. Global Brain will support Mecho on parts procurement from Asian suppliers and business development for the new services to penetrate this fragmented market.”
Mecho Autotech said that it will leverage its existing partnership with Asian aftermarket spare parts manufacturers to provide spare parts to vendors and workshop owners at an affordable rate, Tekedia reported.
What is more, the startup hopes to launch an app for corporate fleet owners by the end of Q3 to discover workshops, access maintenance financing, and manage vehicle data. It will also launch an app for spare parts vendors and workshop owners in Q4.
“In our original business model, our core focus was on vehicle maintenance and repair. But we soon realised a much larger issue—there was an extreme scarcity of high-quality spare parts in the market. Spare parts vendors face frequent stockouts and struggle to access inventory financing. In our marketplace, vendors can source inventory from leading aftermarket spare parts manufacturers and access credit. By solving for spare parts stockouts, we can help solve one of the biggest problems in our industry,” said Olusegun Owoade, Mecho Autotech CEO/co-founder.
So far, the startup has seen more than 6,000 cars from B2B and B2C clients undergo repairs and maintenance from over 110 approved workshops. Mecho Autotech owns three of the shops.