Ayo Alonge, [email protected]
Having started his automobile business 20 years ago, the Chief Executive Officer of Ibrahim Ajetunmobi Autos, Ibrahim Ajetunmobi, recounts his journey into founding an automobile startup which has organically grown without any loan acquisition, although confronted with a couple of challenges not uncommon to most small businesses.
Ajetunmobi, in this interview, bared his mind on competition and patronage, while calling on government to mitigate the attendant challenges and risks in the business.
We are into automobile and deal in sales and maintenance, just to keep your car in the right shape for you, after purchase. I started the car business over 20 years ago. I started with selling Nigerian used cars and now, I travel to America to bring in cars myself. Since I started the business, I have been doing well. On this business, there is one keyword for success and that is sincerity. Most people that sell today are only particular about making profit without minding the after-sales factor. When you are not particular about the after-sales factor, you can’t last in the business. Ever since I have been in the business, I have never for once had any issue with any client. Nobody has ever returned a sold car to me.
I started with registered cars at cheaper rates. I started very low, with about N150,000 with which I got a Starlet. I sold for N350,000. I was so happy and went ahead to buy a bigger car, and I went on and on. It requires a lot of money. To go into selling new cars, you must have good money. If you think of just bringing in bad cars from the US just so you can make a lot of money, you will run at a loss. There is a lot new investors need to learn about the car business.. It is more like being a mechanic yourself. If you must do well in the business, you must learn, whether you are buying to sell Nigerian used cars or imported ones.
That is a general challenge. It is not different from what other importers face with the Customs. The import duties are quite outrageous. Everybody knows that this is a country where we don’t encourage using new cars. We are not encouraged to use new cars. Why is the import duty on new cars so outrageous? That is why I said we are not encouraged to use new cars. I bought my first car for N150,000 and sold for 350,000. I bought the second one and sold for N500,000. I was okay. Since then, it has been a gradual growth for me. The issue at the Customs has really affected our business but we are sailing above it now. We know that in Nigeria, there is no amount of complaint you make that is addressed. That is the country for you and we are living with it as businessmen.
Competition in the business can be easily mitigated because where everyone brings in his own car is different. Cars come in from different sources. Another thing is that some have huge funds for the business while others don’t have. You may have been struggling so hard to raise capital or you even got it through a soft loan from a friend. Some won’t even mind selling faulty cars just to make the profit. That is the extent to which we compete in this line of business. There is competition in every business in Nigeria.
Managing competition depends on your product. Someone can come to your office and see a car for N700,000. If he goes elsewhere and sees same car for N500,000, he immediately spots the difference.
The person might choose the N700,000 car over the one of N500,000. There are cars that are a combination of about five cars put together. By that, I mean that the spare parts of five different cars may have been put together to have that car. These days, most buyers are now open to thoroughly checking the state of a car before buying. You don’t want to take a car home and the next minute, it is giving you a headache. Some buyers now want to go as far as knowing the history of the car.
Patronage is very okay and I must confess that to you sincerely. We sold all the cars we had during the December period, without having one left. All the cars you see now are all brought in this new year. No car brought in last year was rolled into the new year. That tells you that people still buy cars. Car is not food but it is a necessity. You would think it takes one to have fed very well to think of buying a car but we have people who still think of coming to buy cars. There is no single day that cars are not sold. We believe that car is luxury but you can’t move about conveniently without a car.
When you put fuel in your car, it takes you everywhere. So, people should know it is a necessity. Take it this way, 99.9 per cent of people without cars today actually need one. Yet, over half of Nigerians don’t have cars. As we speak now, some are preparing to come buy tomorrow. Some are still saving to come and buy later. If we are not selling, we won’t keep bringing the cars in. Business may be slow now and it’s because of the economy. There is nobody that doesn’t like comfort. I sell certified cars. Cars that you can buy and be at peace with your family. It may interest you to know that after buying cars, most people don’t have that peace of mind. For us, we are not just interested in selling cars, we want to make our name grow reputably. Sales isn’t the only reason we are in business. We are daily creating a platform for people to refer other clients though our goodwill. That’s the goal we have in business.
As a company, it is our target to have more offices all around. If possible, we want to go into selling new cars. There is minimal competition in the sale of new cars. If you are into new cars, you have less worries and that stands you out among most people in the business. We are hoping to have a general service that looks into people bringing their cars for maintenance. I haven’t ever gone for a loan. I don’t like getting loans due to the issues around it. The business keeps growing gradually. I put back whatever I make to ensure the growth of the business.
In terms of finance, government may need to come in by giving people loans. In Nigeria, the narrative is such that small businesses are not encouraged with loans. You see startups striving to grow by themselves without any government aid. If you approach a microfinance bank, the interest rate charged will make any businessman run away. The next call for government should be in the area of addressing import duties charged by the Customs. The import duties paid is really affecting the business. I may buy a car for N10,000 but the cost of freight charged by the Customs will make it very expensive for buyers. That is just how outrageous it is, prompting people to go for old cars. The old cars that are actually more like junk.
The business needs training. The worrisome thing about it is that people now into it do not know much about it. There used to be some well knowledgeable people in the business but today, we have more of people who jump into it just to make money. A prospective buyer then comes in and sees something very cheap, not knowing that it is a faulty car. Well, I think that major challenge is now being mitigated through the help of the Car Dealers Association of Nigeria.