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Friday, September 2, 2011

Lucrative Business Ideas in Nigeria: Buying and Selling Cars in Lagos


The business of selling cars in Lagos Nigeria is a highly lucrative one with so many potential customers out there. There are more than 1 million cars in Lagos Nigeria and majority of them ply ever busy routes all over the metropolis with many of them needing replacement.

The Market

Take for instance transporters. Lagos Nigeria has a very large population with an incredible amount of transportation requirements by residents and commuters alike. This means that cars will always be in demand so long as people need to move about either for business or leisure. Plus on average most Lagos car owners tend to dispose of their cars every 3 or so years buying newer and more economical vehicles as replacement. That means car volume sales will always be up.

Then there are corporate clients as well such as banks, hotels, insurance companies, airlines and government agencies that constantly need to replace their existing fleet of vehicles and young upwardly mobile professionals who are keen to be associated with glamour, all these points to an ever increasing demand for cars.
Even private individuals and small scale businesses are not left out. Many of them would also want to have 
cars for various reasons. As far as car ownership is concerned, a large market exists to be served with cars.

Popular brands

There is no limit to the number of car brands that can be seen on Lagos Nigeria roads but the most popular brands include; Toyota which is the number one selling brand, Honda, Nissan, Volkswagen and Mercedes. Others such as Ford, Renault, Mitsubishi, Mazda, Kia and Peugeot are also available for sale.

Sales projections and profit

How much you make in this business depends on how well you market your cars and handle the competition.  There is practically no end to the sales potential provided you can meet customer needs as and at when due. Obviously there is more sales to be made in second hand cars than in brand new cars since more than 90% of car owners do not have the financial muscle to buy brand new ones. So focusing on the second hand cars is often times a good idea. With an average sales margin of say 20% and price range of N400 000 to N1000 000 gross profit per car sold should be in the region of say N80,000 to over N200 000 depending on your negotiation skills since the market is an open one (for second hand cars) prices can be negotiated.

Finding buyers

Some car dealers find buyers online by using classified adverts from online based listings such as www.nairalist.com which has an auto section. The sister website www.nairaland.com is also another option. Relatively new in online listings are www.dealfish.com.ng and www.dealdey.com which offer car dealers the opportunity to showcase their cars for sale to a large audience. There are many Nigerians who go online these days in search of car deals. In this regard it is wise to have a website to showcase your business to search engines and find people looking for the best car deals online.

Also classified adverts in newspapers and magazines is another way to find buyers just as it is with using church bulletins, posters and outdoor signs.

Sometimes cleverly displaying signs in public places and other strategic locations such as bus stops and busy streets can also add to increasing your business visibility. But the most effective way used by most car dealers so far is to be strategically located along busy roads all over the metropolis. Take a look at the car show rooms in Lagos Nigeria, you will always find them on busy roads and street where they are easily visible.

Finding the cars to buy

If you are going to be doing the business as a second hand car dealer, then importation is a must because they are the most cost effective way to go about it. Some car dealers go straight to Cotonou or Lome for their cars while others import directly from Europe. It all depends on your contacts and the range of vehicles you want to deal in.

Start Up Costs

There is no higher limit to how much you can use for starting but there is a minimum. Let’s say you are highly experienced in finding good cars to sell, with your expertise you can actually start with nothing. All you really need is good contacts and information and of course a great deal of determination. You could be a simple middleman for a start canvassing for buyers for established car dealers. As you successfully convince people to buy from them, you earn a commission and that can serve as a starting point to buying your own cars to sell later in future. So many Nigerians have smiled to the bank this way. But if you have the capital, I guess N400 000 is a good amount to use as startup capital.

Conclusion

To do this business well, you must know your onions. Do your research, choose your area of specialty and remain focused, above all be as professional in this trade as possible. Also look out for trouble makers (dupes, car thieves and touts).

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