- The Chief Executive Officer of Cars45, Soumobroto Ganguly, spoke about the challenges faced by the company
- Ganguly said he became the CEO of Cars45 because the company had gotten to a stage where it needed a mature leader
- The CEO cited the financial backing of OLX as a plus in tackling its challenges and expanding its operational services
With the challenges in the Nigerian digital automotive market, OLX Group has come in handy for Cars45. Since the full acquisition of the company, Cars45 has been at a competitive advantage against its market rivals.
The company has grown in operational services, roaming the digital auto market with the extensive financial power. It falls under one of the four divisions of its parent company, OLX Autos, which has expanded the market size of Cars45.
Information and data challenges causing constant faceoff with agencies
Aside from benefiting financially from the majority shareholder, the company also gain access to automotive information in eighteen countries, which enables the operational strategies across Cars45 markets.
This has helped the company to better understand its market where it is constantly approached by various agencies from customs to the police, due to a lack of information and data on the automotive industry.
In an interview with Legit.ng, the Soumobroto Ganguly, the Chief Executive Officer, of Cars45, said:
"So, there are lot of interventions by agencies, you know whether it's customs or police or other agencies that kind of pertains to the business especially when we track our cars, we get alot of attention from all these agencies.
"There's this lack of data and information on this ministry, I think if there's a collation of data it would help because we're the one building our data and information, for example, how many cars are in the market? We don't know; there should be a system that will help." Ganguly said.
He said separately that:
"We can now say, we now have access to data and technology resources from a very large group that is present in over eighteen countries. I'm talking about OLX; that allows us to do business in a lot of country."
Car sourcing problem and cost unbearable for customers
The aforementioned isn't the only challenge faced by the company, as the industry is faced by the problem of sourcing cars. According to the CEO, Cars45 doesn't have demand problem, as it has the customer base, but the struggle has been meeting this demand.
The problem of sourcing for cars can be traced to the deplorable state of the Nigerian automotive industry which is lacking assemly plants of vital brands demanded by customers, forcing Nigeria to depend on mostly the United States to import from.
Another challenge is the importation tariff and clearing cost at the port that makes these imported cars more expensive than customers bargain for. Despite vehicle duty slashed by the government from 35% to 10%, Ganguly cited vehicles are still costly.
The clearing of popular brands from Toyota, Ford, Nexus, Kia, Mazda, Volkswagen, Benz, Hyundai, and Mitsubishi ranges from N2 million to about N200,000, depending on the production year, according to Carmart.
Ganguly said there's no competition, just car sourcing issue and cost attached to them:
"I think our challenges now is outsourcing. You know that 10% of the business is still digital and 90% is a fragmented market where this becomes competitive is sourcing cars, the demand is not the problem, it's the access of supply And we have to fix looking for the cars the customers want and at the price they want it."
Automakers have recently favoured South Africa and Ghana for their plant location. This is expected to cut the one to three weeks timeframe the ship spend on the water before it reaches Lagos port. However, Nigeria port has its own problem, as it takes one to three months for goods to transit from the port.
Creating a path as a market leader amid smuggling challenge
"Obviously they're very cash rich company that means they have financial stability." This was Ganguly's comment about the deep pocket investor backing his company.
Due to the extensive capital Cars45 is exposed to with the backing of OLX Group, the digital online marketplace for automobiles have been able to mitigate these challenges so far and create a path for itself as a market leader.
"I'll give you two examples; one of them are asset light module where we bring cars for inspection and auction it directly to the ones who have money in their wallet and that is introduced in Pakistan and Indonesia across.
"We also have franchise partners who have the opportunity to be dealer partners and to be at the auction; that is infact interesting for the first time." Legit.ng heard from Ganguly during the chat.
Most of the challenges faced by Cars45 is linked to external problem, which is outside the control of the company. Another issue is smuggling, which led to the shutdown of 272 car marts by Nigeria Customs Service.
"Smuggled cars also affect us because they don't pay duties.. so it affect those who go through the legal way to import the cars." The CEO said during the interview.
Cars45 outperforming its sister companies
Despite its challenges, it has the best margin compared to other sister company., Ganguly stated:
"We also among the group have the best margin so that proves that the module we're following is from the best margin and the group is looking at how to extend it across. So even to the two different stages of the company, we establish the brand, production of very quick part to making it a fast growing startup."
Post-Etop Ikpe: Entering into maturity phase
While Etop Ikpe had led the company since 20q6 before leaving to create his company Autochek, in 2019, Ganguly took over the barton to further drive the company into a maturity phase.
He said there was a need for the company to employ a mature leader, hence, his emergence at Cars45 because they had mature beyond the start. In his explanation on why the company needed to continue on the growth path with him, the CEO said:
"After four years, we probably needed a little more growth And mature leadership."
He added that:
"You know the question of we'll fail or not, means that we've crossed that hurdle plus when you add two hundred people operations in three companies and you have more than ten locations, you probably need a little kind of different leadership."
Meanwhile, Legit.ng had previously reported that Nigerians have been warned against investing in the new cryptocurrency, Safemoon. It was stated that crypto has a high risk compared to others.
Safemoon also has a different operating model, as it regulates the activities of its investors by penalising those who sell their investment after buying. The firm charges 10% tax on such investors.
It was gathered that 5% of the tax payment will be given to those who buy and hold, in order to discourage them from selling.