Spare parts are use to replace old, damage or fault part of vehicles. With over 11 million vehicles running on Nigerian bad roads that damages vehicle parts, it is certain that vehicles in Nigeria constantly need spare parts replacement. Again, there are large numbers of middle class and low income earners in Nigeria who drove fairly used cars that need constant replacement of their parts. These and many more are reasons why there is increase in demand for vehicle spare parts in Nigeria.
Without mincing words, auto spare parts business in Nigeria is a lucrative business. So if your interest is to start spare parts business, and you do not know how to go about it – this post will show you how to start spare parts business in Nigeria. In other words, after reading this article you’ll have all information you need to start a profitable spare parts business in Nigeria.
Some places where spare parts sell fast in Nigeria include places with dense populations and large number of vehicles running on the road. Places like Lagos, Kano, Abuja, Port-Harcourt, Ibadan and many more. If you Start Spare parts business in any of these place results, you’ll make it big time.
Market Overview of Auto Spare Parts in Nigeria
Nigerian’s economy is poorly growing, with the middle and low income earners growing in geometric progression. The implication of this on automotive industry is the increasing demand for spare parts and repair services as many of the citizens of Nigeria can only afford Tokunbo or fairly used vehicles that require constant repair and services.
In 2013, Nigerian government introduced National Automotive industry development Plan (NAIDP) to boost domestic automotive industries; yet new car assembly still remain relatively small accounting for 15% of car sales in 2015. According to westafricaautomotive, Nigeria is going to be Africa’s next automotive hub with the ratio of used car to new car sales being 75:25, and for every new car to 131 used cars on Nigeria’s roads.
Currently, there is increased number of old-aged vehicles on the Nigerian roads. Over 60% of cars on Nigeria’s roads are more than 12 years old, while only 11% are under five years old. The increased number of aged vehicles on the road means there is a constant need for vehicle spare parts and accessories. So, there is huge market for auto spare parts in Nigeria; with Toyota, Honda, Mazda, Ford products as the fast selling brands of auto spare parts and accessories in Nigeria.
Steps to Start Spare Parts Business in Nigeria
Take the following steps to start a spare parts business in Nigeria:
Become Apprentice to an experienced spare parts dealer
The first step towards starting a successfully spare parts business in Nigeria is to become an apprentice to an experienced spare part dealer. Before starting any business, you need to have a thorough understanding of that business. You must study the business and perfectly understand your strategy in order to be a successful auto spare part dealer in Nigeria.
It takes time and effort to study and comprehend how to import genuine spare parts, as well as to know what brands to import and which things to buy. All of this cannot be learned in a single day, so I recommend that you talk to or become an apprentice to an experienced and successful
spare part dealer.
You can agree to learn from this expert for a year or two. This will allow you plenty of time to learn the ins and outs of the business. You can find this experienced dealer in your area or Ladipo in Lagos (a major spare part market). He can also assist you in the early stages of establishing your own spare part business in Nigeria.
Draft Business Plan
Once, you’re done with your apprenticeship; the next step is to draft a business plan. You’ll need a good spare parts business plan that will help you determine the costs of running the business, the best approach to increase your profit, the best brands to buy, the number of workers needed, marketing, etc. Your startup capital should be reflected in your plan.
Business plan is essential for all businesses since it predicts if the business will be profitable or have potential losses. If you don’t have a business plan, you will be left to just handle things as they come without a comprehensive strategy on what to do if there are unforeseen circumstances.
Spare part business in Nigeria needs huge capital, however, you can make millions of profit from this business. You can either start in small-scale, medium, or large-scale, it all depends on your capital. To start a small-scale spare parts business, you will need a capital of about #500,000 – #1 million but if you want to start a medium or large-scale spare parts business you will need a capital of about #2 million – #10 million. Also keep in mind that apart from the capital, you also need to have money set aside for getting a store or warehouse, staff etc. Look at the Ways to Source Funds for Business in Nigeria
Choose Brands of spare parts
To pick brands, you have to remember that the spare parts business involves buying and selling spare parts for your customers’ worn-out vehicle parts. So, you need to pick based on how plenty that particular brand is in Nigeria. Most popular brands of Vehicles in Nigeria are Toyota, Honda, Hyundai, Nissan, Mazda and Ford products. So, these brands of spare parts are fast selling spare parts in Nigeria. To make money in auto spare parts business in Nigeria, you need to focus on these brands.
Another way to look at this is to focus on the not-so-popular brands. There are plenty people selling the popular brands and this can be a competition for you if you are located in markets that deal majorly with spare parts.
But if you focus on the not-so-popular brands, you can almost be assured that customers will come to you when they need spare parts for that brand of vehicle. You can even combine both popular and unpopular brands. Make sure you do thorough research. Also, as time goes by, you can add more and more brands. See the List of 57 most used Cars in Nigeria
Get all required Permit
Get registered with the appropriate authorities. This will help you get a license and other important paperwork that will allow you to run a spare parts business in Nigeria. Inquire from experienced people about obtaining an auto spare parts business license. You must register with the relevant authorities, such as the Auto Spare Parts and Machinery Dealers Association (ASPMDA).
As a prospective spare parts dealer, you need to rent a shop or warehouse for your goods. There are two ways you can rent a shop for this business. You can rent a shop in a major spare parts market like Ladipo Lagos or simply rent a shop in an exposed area.
Remember that location matters a lot and it can increase the exposure of your business. That’s why most spare parts dealers prefer to sell their goods in the market. In whatever location you pick, you can rent a small shop to start with till you grow big and can expand to a warehouse. Ensure the warehouse or store is effectively protected against bulgary. See the 15 Tips on finding right location for business
Buy the Spare Parts
There are two methods to obtain spare parts: through local importers or by importing them into the country yourself. The majority of spare parts offered in Nigeria are imported from China and America. If you want to buy from local importers in Lagos, you need to first compare the quality and price of different importers at Ladipo market then pick out the best.
If you are not in Lagos, you can travel down to compare prices and quality then select 2 to 4 importers that you will be buying from. Subsequently, you can just tell them to waybill it to you so you don’t always have to come to Lagos to get the goods. Or you can simply buy from importers in your state.
Organize your Store
Set up a sign post and make sure all necessary wiring, shelves, etc are done well. Also, make sure you have a branded invoice book, business cards, a sales record book, and so on. If the store is large, you may need to employ receptionist and salespersons. However, you can start on low scale and then, grow big.
Marketing and Start Selling
Finally, market the spare parts to start selling. Ensure you use word of mouth to spread your business around, visit several mechanic villages, give them your business cards, collect their numbers and build a rapport with them. You can even tell them you will deliver it to their shop. Also, emphasize that you sell genuine parts. This is a very simple way for you to get customers and start making your money. Another method of marketing your business is to have an online presence.
You can use Google My Business; this will give you an extra edge because most of your competitors are not online so your business can quickly be seen by people that are searching for spare parts to buy online. Also use social media. Make sure you include the brands you sell, pictures of your goods, address, and phone number, and emphasize that your goods are genuine.
In conclusion, the spare part business in Nigeria is very profitable however; you need a
thorough knowledge of the business before you can dive in. Getting the required knowledge is
easy, simply talk to an expert or become an apprentice for a period of time so you can master
the trade. For the most part, you need to write your business plan, gather up your capital, get your permit, store, and your goods and you are ready to start a spare part business in Nigeria.
How lucrative is auto spare parts in Nigeria?
With the huge market for auto spare parts in Nigeria, auto Spare Parts is a lucrative business. Though, the capital requirement for starting the business in Nigeria might be high, the profit margin is exceedingly higher. So, an auto or motor spare part is a business that’s worth venturing into if you have the capital.
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