In its early days, this is how it used to work. There were two customers, the car seller and the car buyer, and then there was Autochek.
Autochek presented itself as a marketplace for people who wanted to buy cars to meet up. Years later, that company expanded into eight markets on the continent– Nigeria, Côte d’Ivoire, Ghana, Morocco, Senegal, Uganda, Kenya and South Africa– partnered with over 2000 dealers and built a car financing product Autochek Financial Services.
In July, the veteran asset financing executive Johan van der Merwe, with over two decades in the industry working at companies like WesBank, joined the arm as CEO. Now, he has to look for a way to bring credit financing to thriving markets across the continent as quickly and efficiently as possible.
“The basics of the model that Autochek has put in place is tremendous,” Johan said as his strategy to penetrate different markets across Africa.
“Each one has got its own nuances. South Africa is a very mature market when it comes to vehicle financing. But in Africa, there is no dominant player. The credit penetration is very low. The whole concept of asset financing and understanding collateral is growing and that is where the opportunities lie. The nuance in all the markets we’re currently in is what makes them unique and interesting.” he said.
But even after understanding the markets, the big question lies in credit penetration. In many markets, credit penetration is very low. But over the years, some companies have come into the market looking to solve these problems. Autochek stands out because it has run a marketplace, giving it years ahead of its competitors.
Johan says that now is the perfect time for asset financing products to come into the market. “As a concept, we are trying to standardise the basics of credit lending but with the nuances of every country. We’ve done due diligence in Nigeria in terms of opportunity. I just think there is so much opportunity in the economy of Nigeria. It’s sort of hungry for a solution that will help it have better penetration, especially in vehicle financing.” he said.
But even with this hunger that he sees, he admits that the process of getting the financing can be better than what is currently obtained in the market. Consumers are not just looking for financing options, but they are looking for financing options that are efficient and quick. The banks that vehicle financing companies partnered with in Nigeria don’t see the value clearly in an asset like a car and why customers need a longer period to repay.
“The process is where the gaps exist,” Johan said. “The banks took too long to approve transactions, and they still didn’t understand the asset value. Now we’ve brought the two together, marketplace and financing services that firstly allow people to look for the vehicle and finance that vehicle. We finance vehicles with insurance and maintenance plans. All the things together that would have been the responsibility of the consumer,” he said.
For Johan, consumers will come if Autochek can give them “the comfort” they need.
Who is the Autochek consumer?
“Autochek has two customers; the dealer and then the consumer, people that haven’t necessarily bought or financed a vehicle over an extended period before. Due to the lack of credit penetration, a lot of people have to put sixty, or eighty per cent down on a vehicle or result to a personal loan. We are enabling people to finance over 36, 48 month period with a more reduced deposit because we understand the collateral value of that vehicle.” he said.
But even as the company seeks to quench a hunger for car financing options in the markets, Autochek has come under criticism for higher rates of cars at times above market value. Olorunmoyo bought her car through Autochek in 2021. She said that she later found out it was far higher than regular rates from a colleague who was into cars.
“I don’t regret buying through them because I can always drag them if something had gone wrong. She said, “the price was just higher than what I was told it would have been if I had bought directly from the dealer“
“I just tell them the amount I want for my car, it’s as simple as that. I look at the market value; whether it’s accident-free. The state determines the amount I list my cars for,” Stephen, who works as a dealer for multiple vehicle marketplace platforms, said.
Johan said dealers set the prices of the cars they list on their platform. “The dealership is the custodian of the vehicle and he controls the pricing,” Johan said.
“We go through a process of insisting affordability on every customer. We go through your income and access what is reasonable because we don’t want to indebt a customer. We don’t want to finance vehicles for you that you cannot afford,” he added.
The high prices of cars, especially as currencies on the continent continue to fall against the dollar, pose a problem to the affordability of cars, most of which are imported.
Many African countries have been unable to engineer and produce affordable cars on the continent. The few that have been able to couple cars on the continent, like Innoson Vehicles in Nigeria, are priced higher than imported cars, defeating the point of local production in the first place.
For anyone who seeks to solve the credit problem in Africa, navigating the fluctuating currency would be a good place to start.
Read also: Online automobile selling companies make profit of up to 150% off car sales
“There’s always going to be a need for mobility. People need to travel from point A to point B. If you don’t have public transport then you need to acquire a vehicle. Even countries with very high fluctuation rates, they perform reasonably. Ghana is one of our best-performing books because they need transport to ensure mobility,” he said.
Where does Johan see Autochek Financial Services in the next five years? Hopefully, he said, as a dominant force in vehicle financing, an industry that still doesn’t have a dominant player. Companies like Moove have come into the space, but they finance only through partnerships with ride-hailing giants like Uber.
“Our aim is to finance obviously as much as possible across the continent, to really make a difference in terms of mobility. The credit penetration is very low, so through us, we’re enabling a lot of people to buy vehicles. Overall, it boosts the economy because they will be more dealerships and stimulate trade on a local level. Our ambition is to improve the vehicle industry all over the continent.” he said.
For this to happen, however, the banking industry will have to see the opportunities in car financing and why long-term repayment plans are important and of course, credit scores will be important. “The banking system overall needs to mature a bit to enable it,” he said.
In the meantime, Johan is ready to do the preliminary groundwork to yield these results and help him finance as many cars as there are credit-worthy customers.
“What we’re doing now is putting a lot of the basics in place to build a scalable, expandable business. We are in 8 countries at this stage and we’re not planning to necessarily go into every country in Africa. But where there is potential, we will assess and we will grow,” he said.
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