How I Pioneered Automotive Auction Business In Nigeria – CEO Cars45, Etop Ikpe

April 20, 2020
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Etop Ikpe a graduate of University of Lagos, Lagos State, is the founder and Chief Executive Officer (CEO) of Cars45. In this interview with NIYI OYEDEJI, he speaks on how he is harnessing digital technology to promote the automotive auction business he pioneered in Nigeria.

WHAT is your entrepreneurial background?

I grew up predominantly in Lagos, having been born and bred there and done all my schooling in the city. Even though my dad was an accountant, he was very entrepreneurial and always doing business. In retrospect, I suspect that he is the biggest influence I’ve had in terms of starting business ventures. Also, I have always believed that great things can indeed come out of Nigeria and Africa and that has propelled me to look for opportunities to solve problems and make impact.

While at the University of Lagos, which was where I cut my entrepreneurial teeth, I tried my hands on a couple of ventures that included running a cinema space out of Lagos, deploying animation and creative materials for multinationals. But in my final year, I partnered with a friend and started a bespoke software development company where the focus was on providing B2B solutions. We did that for about 2 years. I also had stints in the media where I had a TV production company and we produced a couple of game shows that were broadcast on leading cable stations at that time. My first real foray where I built my career from was consumer internet. I founded one of the first ever consumer internet companies in Nigeria, which was called Three Stitches. It was an online fashion retail store. My cofounder in that business used to sell clothes and I figured out that there was a more efficient way to do this business than opening a lot of stores. It was quite successful days before some of the bigger e-commerce companies that we know now. That was how I got into the e-commerce space. In about 2011, my company was acquired by DealDey.com, which was one of the largest discount companies in the country. I moved on to DealDey where I was CEO for about 4 years, then moving on to Konga where I was commercial director up until I started Cars45 in July 2016.

Going into all these enterprises has helped me to understand the business dynamics across various industries.

Beyond entrepreneurship, I am passionate about supporting the development of young people across Africa so I have informal mentoring sessions with many young people to help them be the best versions of themselves.

What is your business all about?

Cars45 is a digitally driven and technology enabled platform in the business of transforming the way cars are traded in Africa by providing a transparent and stress-free way to source, inspect and acquire cars. We are trying to enhance and improve trading in the automotive sector and have focused on 3 core areas – Firstly, pricing. Pricing has been a big deal, especially considering the fragmented and opaque nature of things around the sector. In Nigeria for instance, there is no kind of standard valuation of pricing system in Nigeria, like the KellyBlueBook that is used in the US to determine how much a car is worth. We have built out the first proprietary valuation system for vehicle pricing in the country. Essentially, people are able to get a fair sense of what amount they can sell their vehicles considering a range of parameters that include vehicle condition, market demand, etc.

Secondly, with our over 70 experience centres across 11 states in Nigeria, consumers can now get to understand the true condition of their vehicles via the 200-point inspection, due diligence and background checks that we carry out on every vehicle that comes through our system. We are also removing some of the bottlenecks associated with verifying car ownership in order to bring a level of transparency and efficiency to automotive transactions.  It is also pertinent to mention that we have helped to improve the speed in selling a car while empowering consumers with information to enable them make informed buying decisions when looking to purchase a car.

Lastly, we are investing and supporting the development of car dealers – a segment that has been greatly under served – and helping them get access to inventory, financing options and partnering with them to drive sales. We have also recently launched the Cars45 marketplace across our operations in Nigeria, Ghana and Kenya. This is another transparent and convenient solution that connects buyers and sellers together in a seamless and secure way.

For us, our ambition is to empower mobility across Africa and provide consumers with access to best-in-class automotive services including vehicle maintenance, servicing, inspection, sales, swap and other value-added services such as corporate sales, leasing, financing.

What inspired you to start your business?

When I left Konga I was keen to use the experience I had gathered to deliver a solution to a similar problem in Nigeria and Africa. The decision to play in this automotive space was based on a close analysis of the market. I was particularly interested in solving a very big problem. We analyzed the market, looking at the various challenges across various industries. After looking at the market opportunities, we felt this was the best place we could extract and create a lot of value for people, having experienced firsthand some of the challenges associated with the automotive industry and the difficulty of buying and selling cars in Nigeria.

Anyone that has ever bought, sold or maintained a car in Nigeria will be familiar with the informal nature of the automotive industry, and the opaque pricing and quality assurance structures that come with it. There is often no objective way to know the value and performance of the car that is to be bought or sold. As a result, trust is rare, as both buyers and sellers cannot guarantee that what they want is actually what they will get.

This is why we started Cars45, to build trust by bringing much needed transparency to the market.

What was your start-up capital?

Our first seed round was around $500,000 and about 8 months later we were able to raise another 5 million dollars in Series A. For many Nigerian or African businesses looking for funding, raising capital can be challenging. Right from the start, I knew that it was going to be a very capital-intensive business. For us, one of the things we had done from day 1 is to have good relations with potential investors. We let them know what we were doing and carried them along with our progress. I always advise people, don’t wait till you are desperate. Let them feel like they are part of the business.

When was your business established?

Cars45 was founded in 2016 to fill a gap we found in the automobile industry particularly around how people buy and sell used cars.

What are your expansion plans?

We already have almost 100 experience centres across three countries (Nigeria, Ghana and Kenya) and aim to increase the number of centres and the range of products and services we provide at these centres. This year alone, we have moved into more cities that include, Owerri, Ilorin, Benin, Kaduna, Asaba and Onitsha.

We are on a journey to empower mobility across Africa. In the short term, our main objective is to transform the automotive trading environment by making the process of buying and selling cars seamless – as simple as possible for everyone.

In the long term, we are looking to create other opportunities and services beyond trading in the automotive value chain via partnerships and collaborations. So, the future for us is to continue to deliver world class solutions in the automotive sector across Africa, thus creating an environment where everything automotive can be done. We are on a long and patient journey.

What are the major challenges you have faced since you started your business?

Some of the initial challenges were with the difficulty of verifying vehicles, availability of data and information around the industry whether it’s in verifying ownership, customs duty payment and other services. We need transparency in the automotive sector – vehicle registration and payment as well as other ancillaries, we should have a digital space for warehousing the requisite information. We also had to invest a lot of time and resources into developing a system for verification and valuations.

As a market maker, it takes time for people to understand what your value proposition is. So, there might be initial skepticism and resistance from the market because people fear what they don’t know. But we have done a lot of engagement with key stakeholders and one thing that is consistent is that as we unravel and move forward, the goal becomes clearer.

As a business in Africa, you must be patient, learn how to speak better and clearer, stay true to your values and with time you will get where you are going.

How do you think the Government can address these challenges?

Like any other business in the country, our main request of the government is to create an enabling environment in which our business and the value we offer can flourish.

We are also very much open to working with government and regulators to develop the right legislation that will protect consumers and enable more growth in the automotive industry.

How many Awards and grants have you won so far?

For pioneering the automotive auction business and providing opportunities for growth and innovation in Nigeria’s automotive industry, I was made a Distinguished Fellow of the Chartered Institute of Auctioneers of Nigeria, the professional body responsible for training and certification of Auctioneers in Nigeria. Last year, Cars45 also received the award of the Online Auto Marketing Company of The Year by the Nigeria Auto Journalists Association (NAJA)

What advice do you have for other young people that are interested in what you do?

A lot of young people are starting businesses or at least considering entrepreneurship today and that is a wonderful thing. Entrepreneurs are the lifeblood of any economy and a healthy business ecosystem is bound to drive economic growth in any society.

While entrepreneurship is essential, what is even more essential is that entrepreneurs focus on identifying and solving problems that really make a big difference for the highest number of people. It can be easy to jump on the bandwagon and start a business just because a particular sector is popular or because you think you can make money quickly. However, taking a problem-solving approach to entrepreneurship will set you up for long term success in your entrepreneurship journey.

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