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Monday, February 19, 2018

Sample Business Plan on Auto Repair and Vehicle Service Center in Nigeria



The Auto repair and vehicle service center in Nigeria is largely dominated (at least over 90%) by informal and small sized providers. These are mainly poorly trained car technicians with very little formal education who repair, maintain and service cars belonging to usually better educated people. This often creates many unpleasant situations for the clients who may misunderstand the technicians and vice versa or less than satisfactory service rendered.

If you ever had the displeasure of working with a road side mechanic who is poorly educated, doesn’t know his/her job well enough, lies to you about prices of car parts you need to replace and still behaves badly while working for you, it won’t be a surprise if someone insists that car service centers are a must for Nigerian car owners.

A professionally run Auto repair and Vehicle service center would have certified and well trained mechanics and technicians, adequate equipment for technicians to work with, more current with professional service standards, can accurately tell you want is wrong with your car and won’t waste your time and money because of trial and error work which many road side mechanics are used to doing.

The market for this revolves mostly around corporate bodies with fleet of vehicles, that includes; government agencies, transport companies, manufacturers, schools, banks, telecoms companies, embassies, security agencies (police, civil defense, DSS etc), hospitals etc
 
  • Auto Service Centers service a gap which roadside mechanics have created
  • Their services tend to cost more because of higher overhead costs but offer greater value for money to end users in comparison to roadside mechanics
  • They serve the formal sector better because of the professionalism, measurable performance and value they have to offer 
  • Road Mechanics are usually unorganized and unreliable.

Opportunities for Auto Service Center in Nigeria

  • Nigeria has a huge number of second hand vehicles which are in need of corrective maintenance meaning the market pool is large
  • Nigeria has one of the highest incidents of road crashes
  • Most Nigerian roads outside of the major cities are not ‘motorable’ which is one of the major causes of frequent breakdown and damage of cars and car parts
  • Nigerians attach a lot of importance to second hand car spare parts which only offer temporary reprieve for car owners trying to service their vehicles
  • At least 55% of vehicles on Nigerian roads are for commercial use which contributes to their increased mileage, need for servicing and tendency to breakdown
  • The business operates within a range of commercial ventures meaning multiple revenue streams
  • The unprofessional and dishonest attitudes of most mechanics often times means those who can afford it would rather patronize the auto service centers
  • The Nigerian middleclass is sizeable and despite the economic challenges is still growing annually
  • The second hand market value of cars continues to drop (in dollar terms) and there are indications that this would continue for years to come as newer car models keep hitting the market yearly
  • Large number of organisations operate fleets of cars in Nigeria and they have managerial requirements which most road side mechanics cannot meet but well run auto service centers can
  • Car ownership numbers in Nigeria keeps going up, combined with rapid urbanization means potential annual sales growth
  • Most of Nigeria’s transportation needs (at least 98%) is by road with interstate transport services conveying at least 19 million people daily
Challenges Auto Service Centers may Face in Nigeria include;
  • Professionalism and Competency issues with Auto service technicians is more common than rare
  • Many Nigerians still believe they pay too much for car maintenance which means acceptance towards Auto service centers would be rather slow
  • They are often plagued by high operating costs and low profit margins
  • Securing crucial contracts from large corporate clients can be very difficult
Startup Costs for a Car Service Center in Nigeria
  • Rent – 960,000
  • Auto Service Tools and Equipment – 1,240,000
  • Adverts, printing and stationery – 60,000
  • Furniture – 340,000
  • Salaries (6 months) – 1,800,000
  • Operating Costs (6 months) 1,800,000
  • Other costs – 3,259,680
  • Total costs – 9,360,000

Financial Projections for first year
  • Gross Sales – 19,800,000
  • Cost of Sales – 3,960,000
  • Operating Costs – 7,200,000
  • Profit before tax – 8,640,000
  • Taxation – 2,592,000
  • Profit after tax – 6,048,000
  • Breakeven – less than 10 months
  • Payback period – Second Year
Paul Onwueme is a professional Business Plan writer since February 2014, has achieved respectable results with his business plan writing service with several of his clients securing funding and leaving positive feedback about his writing service. You can connect with him via phone: 0803 206 4106 or email: paulonwueme@gmail.com 

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