There is no doubt about the profitability of selling cars in Lagos Nigeria as this very vibrant business still thrives even in this era of so called financial crunch.
There are basically two kinds of car resellership businesses based on how cars are sourced from supply and these are;
Sellers of fairly used (Tokunbo) cars which are often imported from either other West Africa countries or those imported directly from the far east, Europe and America
Sellers of brand new (tear rubber) cars
Opportunities of Selling Cars in Lagos Nigeria
Majority of Nigerian car owners are middle class individuals or families. Social infrastructure especially state of roads and public transportation system in Lagos Nigeria is such that middle income class individuals and group would rather own their vehicle even if it isn’t brand new. The era of rickety taxis is gradually given way to corporate taxis and many Nigerians are also embracing consumer lending options in their bid to become car owners.
Reasons why people buy cars in Lagos Nigeria
Here is a list of the most common reasons Lagos Nigerian residents and workers purchase cars;
- People need to own cars to transact business of various kinds.
- Desire to belong to a certain social class and hence will purchase cars they think fits their expectations for that class.
- Others are rational in their needs about why they should buy cars. They might desire situations that enhance their ability to network with possible customers and business partners.
- People also purchase value especially quality and durability.
Generally people buy cars that can fit into their budgets and lifestyle.
Major buyers of Brand New Cars in Lagos Nigeria
Corporate and large scale formal sector businesses are the major buyers of new cars in Lagos Nigeria. Banks, Insurance companies and other financial industry based companies are leading buyers of new cars. Other customers include; petroleum marketing businesses, professional services especially media services, Hospitality, airlines, manufacturers, transport based businesses such as car rental companies, courier companies and even haulage among others.
Major buyers of Second hand Cars in Lagos Nigeria
Most private individuals and SMEs purchase second hand cars because they are affordable. However, when maintenance cost is taken into cognizance as well it is far wiser to buy a top grade second hand cars and that is the thinking of most SME business owners and middle class folks. If you are into grade A tokunbo cars, then you should ensure that your selling point attracts this class of people. Also note that some rich people also buy tokunbo cars but this is under special conditions.
Challenges of Selling Cars in Lagos Nigeria
There are a lot of challenges involved in buying and reselling cars. A number of these challenges are better seen as threats because of the adverse effects they tend to have businesses. Chief of these challenges is vandalism and sabotage.
As a car salesman you need to be aware that there is stiff competition in selling cars. You are in a highly competitive industry where the subtle battle for customers’ attention can result in lower margins meaning lesser profit and worse still if cost of doing business also shoots up.
Access to finance or funding your expansion will especially be a challenge even from the so called micro-finance institutions. As an SME, your business has to compete against well established heavy weights many of whom have access to far more capital than you could ever imagine. Many large car sellers can afford consumer leasing programmes and other eye catching sales promos.
Leading Car brands
The leading car brands in Lagos Nigeria include; Toyota, Honda and Hyundai for the ‘tear rubber’ category of cars (in that order) while Toyota, Honda, and Volkswagen are clear leaders in the tokunbo category of cars.
Dealing in cars is a lucrative business especially when you know your customers and how to reach them.