Etop Ikpe is the Chief Executive Officer of Cars45, one of Africa’s largest digital automotive trading platform. Cars45 is a technology platform that drives the automobile industry across Africa. Before Ikpe founded it in 2016, he served as CEO at Dealdey.com and as Commercial Director at Konga.com, one of Nigeria’s largest e-commerce platforms.
In this interview with Nairametrics, Ikpe shares the growth story of Cars45, the industry’s black market, the challenges faced when operating in Nigeria, and discussed the issue with the ‘Made-in-Nigeria campaign’, amongst many more issues.
Cars45 raised funds in 2017, are there plans to raise more cash for the operation?
We have seen a huge market potential and we are at a very early stage in our growth and development as a business. There are major growth cycles that we would always achieve and most of those cycles require that we infuse some level of additional investment to the business. It’s a natural process to grow, and meet bourgeoning market demand, and during those growth curves, you’ll need more investment.
What have been the challenges of operating in Nigeria?
Our values of providing solutions to customers’ problems will never go out of fashion. As a market maker, it takes time for people to understand what your value propositions are. So, there might be initial skepticism and resistance from the market because people fear what they don’t know. We have done a lot of engagement with the authorities and one consistent thing is that as we unravel and move forward, the goal becomes clearer. The biggest challenge has always been staying true to our values beyond the criticism that we receive and maintain our discipline.
It is also to remember that the market is very fragmented and so there is very little structure around the market. So as you develop, the ecosystem that is needed to support the business might not necessarily be there. It simply means we have to build a lot of partnerships and relationships with a lot of other parties.
To be honest, not everybody is ready to move in the direction we are proposing; some people are comfortable just operating small, but I think it’s a gradual process. If you are innovating around something, then part of the skillset that you need is patience and you need to develop a market over time.
How do competitors affect the business decisions and operation of Cars45?
The mere lack of structure for us is the competition. I think the market is too large for anyone to be narrow-minded. There is so much value that can be extracted from this industry and so we are very focused on creating structures and opportunities within the market. We have our eyes on valuable business models and others worth keeping an eye on; but fundamentally, the lack of structure in the market is the competition and we are working hard at enhancing and solving that challenge.
How will you rate the automobile industry in Nigeria in the last three years?
Nigeria’s automotive industry is extremely valuable, but then, it is one of the most fascinating industries in Nigeria simply because of the sheer number of entrepreneurs and individuals who are able to hustle hard and grind. If there is one industry, I find to be feeding a lot of people, maybe after the markets, the automotive segment is one of the biggest enablers of economic prosperity for a lot of people.
The beauty of it is that we have seen people who might have been excluded as a result of say lack of access to education, thrive in this space. I am enthralled by the amount of value that this industry can create for people irrespective of their social class and standing.
What needs to be done to improve demand for Made-in-Nigeria brand cars?
I don’t think it is right that we have a mentality that people should buy Made-in-Nigeria products just because we are Nigerians. We should strive to make products that are globally standardized and recognizable; products that can stand side by side with others in that category. Nigerian music, literature, fashion, and food have shown us that we can create products on that level and will have mass appeal globally.
We see what Nigerian banks are doing across Sub-Sahara Africa. In manufacturing, Dangote is exporting manufacturing expertise to countries across the continent. And it’s nothing new — if you look at the past, Nigeria led the charge helping to standardize the civil service across Africa.
And so, we should have moved past the sentiment that we should accept something just because it is made in Nigeria. We should be an exemplar of excellence. As we have seen, people are always willing to pay a premium on Nigerian products that have demonstrated this excellence.
Customs wants a cut in import duties for cars, how will it affect the automotive industry in Nigeria?
The reality is that every single country that has wanted to grow its local automotive manufacturing industry reduced vehicle imports. So, it is a natural transition that would occur. However, in Nigeria, we have a high demand for cars.
Therefore, what we need to do is to make a strategic transition that must be robust and all-inclusive, addressing pain-points like power, distribution, and accessibility is closely linked to the issue of financing. If we can fix finance, which in turn would make the cars more affordable, people would buy and that would keep the factories running. The automotive industry and financing go hand in hand.
When people cannot afford to buy new or used cars, the automotive industry will not thrive. Any investor who sees that there is a high number of cars being purchased in your market will be willing to make the needed investment, so if we require a hydro-thermal plant to power the automotive plants, they’ll build one.
The automotive industry will only grow and thrive to the degree that people are able to purchase cars and not by the number of cars that are manufactured locally. If we don’t fix financing for motor vehicles, we can’t accelerate local manufacturing penetration.
How did Cars45 overcome the black market to engrave its footprint in the sell & buy used cars market?
Essentially, what we have done is to bring transparency, speed, and structure to a highly fragmented space. And we are glad that people have been very receptive to the service, every day it’s about building. We are never perfect at what we do, and we are constantly chasing perfection. We have a mindset where we know we may never be perfect, but we always try to be perfect and that really is our notion on how we operate, and our core goals are really around operational excellence. This is what has helped us to cement our place in the market.
In which states is Cars45 operating and which states do you see revenue potential for Cars45 to expand into?
Currently, we have over 60 retail inspection centres across Lagos, PortHarcourt, Abuja, Ibadan, Kano, and Benin. We also have over 200 locations across these cities where consumers can get verified cars to buy at very affordable prices. We are looking to expand to other cities across the country before the year ends. The revenue potentials of other states outside where we currently operate is a function of return on investment. If you have commercial activities taking place in that space, every market has the potentials to grow and bloom.
So, for us the question is, are there cars currently being traded in those places? Yes. Based on volume and population, it won’t be the same as what you’ll find in the tier-one cities. But if you properly do an analysis in terms of what the market potentials look like, that should help you determine how much you invest financially and the management bandwidth that would be invested as well in a manner that is commensurate with the ROI that you expect. Every product that you’ll describe as a standardized product is available in every city.
What differentiates Cars45 from other competitors in the market?
We are very humble about our knowledge and we’ve learned to respect the market. So, we don’t come with an attitude that we know the market, but we come with the mindset that as long as the market demands it, we are going to deliver it. Customers get enormous value, especially an automotive lifetime experience.
The reality is that by coming into our ecosystem, you are not just buying or selling a car, you are buying an automotive experience. We are that platform that gives access and also helps in your decision-making process, making it more transparent for you to understand the things that are necessary and giving you the best value towards maintenance, disposal, and purchase of a car. We also give the best advice and a wide range of options as well; so, really, it’s a 360 lifestyle that we provide. We come up with a lot of products to service our customers.
What birthed the idea to set up Cars45?
We created Cars45 basically to fill a gap we found in the automobile industry, particularly around how people buy and sell used cars. If you think about it, when people talk about the automobile policy, it is focused on the one percent because everything is focused on brand new cars. However, 99% of the cars that people drive are used cars.
There are a lot of problems around pricing and how people verify cars, including various things around it. I have had issues trying to buy or sell cars. So, I figured that it’s a big industry. It affects a lot of people and it definitely needs some level of transparency and efficiency. We also saw that it was something that affects a lot of people, with lots of challenges but it is a very important industry.
How will you describe the growth of Cars45 since the establishment?
From day one, we have always been about bringing trust and transparency into the market. We found that demand had come from an initial service that we had provided which is easy liquidation for anyone that wanted to sell their car and similarly supply to car dealers. A demand had come for us to look deeper into the market, beyond the initial problem that we had solved because we are very keen on taking customer feedback. We began to craft our business to address the most common challenges in the market which is easy access to verified cars.
Taking a lead from that is affordability; if you look at the industry, you will notice that the automotive industry and financing go hand in hand. Our solutions have solved the problem of valuation and verification which has now made it possible for financing houses to lend and provide financing for people to purchase cars. We have also put structures in place to support those who bought cars in the system with servicing and vehicle maintenance.
This is in addition to our premium inspection service which has opened a new vista of consumers to us, and our emergency service that helps stranded motorists when they are stuck. These are the services that show that we are much more than a platform for just trading vehicles; it’s a platform where anything automotive can be achieved. Cars45’s growth has been possible as a result of the market acceptance of its value-adding services.
What’s the short-term and long-term plan of Cars45 for its market base?
In the short term, our major plan is to help lubricate the wheels of the automotive trading environment. Typically, in its simplest form, this would mean making the process of buying and selling cars as simple as possible for people. In the long term, our vision is to create and enhance the trading environment and unlock the real value in this industry.
There are so many opportunities beyond trading in the automotive value chain and if we are able to create a very transparent, transactional and valuable trading base, this would enable partnerships and collaborations that will build the other sectors which in some cases are much more viable than trading. We want to create an environment where everything automotive can be done.
Senate calls for the liberalization of cement policy to crash the price of the commodity
The Senate also tasked the FG on providing more industrial incentives to bring new players into the cement industry.
The Nigerian Senate has called for the liberalization of Nigeria’s cement policy to boost production and subsequently crash the price of the commodity in the country.
This motion was raised by Senator Lola Ashiru at today’s senate plenary, the senator also tasked the Federal Government on providing more industrial incentives to bring new players into the cement industry, in addition to the liberalization of the cement policy in Nigeria.
Ashiru explained that to reduce the price of cement and in extension, other building materials in the country, the Federal Government needs to provide an enabling operating environment that will encourage new entrants in the country.
The Senate in conclusion called on the FG to provide more industrial incentives and protections such as concessionary loans and larger tax incentives to encourage new entrants and expand the national cement production infrastructure, as this boost in production will lead to a downward review of cement price in Nigeria.
What industry leaders are saying
Earlier this year the founder of BUA Group, Abdulsamad Rabiu, called for the liberalization of Nigeria’s cement policy to boost production and reduce the price of the commodity.
The billionaire philanthropist faulted the belief that Nigeria is self-sufficient in terms of cement production, noting that recent statistics and figures on Nigeria’s population and cement production do not support this status of sufficiency in cement production as stated by some individuals.
He attributed the high price of cement products in the country to the supply gap which exists in the country, as the few producers who currently operate in the country are unable able to meet the country’s huge and growing demand.
The Group Executive Director, Strategy, Portfolio Development and Capital Projects, Devakumar Edwin, explained that the demand and consumption of cement in the nation currently outstrips supply, and this can be pegged on the growth in the country’s population, and the strong appetite for real estate investment and construction in the country.
He revealed that a supply gap of about 40% exists in the country’s cement market and that all players in the industry are working hard to level production with the rising demand in the country.
Paypal’s Venmo now permits cryptocurrency trading
Venmo will support four different cryptocurrencies: Bitcoin, Ethereum, Bitcoin Cash, and Litecoin.
Venmo, a mobile payment service owned by PayPal has announced that it has started allowing users to buy, hold and sell cryptocurrencies on its app. Just like PayPal, Venmo will support four different cryptocurrencies: Bitcoin, Ethereum, Bitcoin Cash, and Litecoin, and users can carry out transactions with as little as $1 on the app
Founded in 2009, Venmo has over 70 million users and it is one of the most popular payment channels in the US. The payment platform processed around $159 billion in payments last year.
Since the app functions like a social network, adding cryptocurrency will offer a more user-friendly feel for people who love buying and selling crypto.
As bigger companies show more interest in cryptocurrency, there will be wider adoption of virtual currencies in future. Venmo is the latest payment app that is offering support for cryptocurrency on its platform.
Paypal, the parent company of Venmo is one of the most active companies in the crypto space as it allows users to buy, sell and hold cryptocurrencies in their digital wallets. Paypal users can also spend their coins at millions of merchants globally.
Crypto on Venmo is enabled through PayPal’s partnership with Paxos Trust Company, a regulated provider of cryptocurrency products and services.
What they are saying
Darrell Esch, Venmo’s Senior Vice President and general manager said “Our goal is to provide our customers with an easy-to-use platform that simplifies the process of buying and selling cryptocurrencies and demystifies some of the common questions and misconceptions that consumers may have.”
Nairametrics | Company Earnings
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