Car ownership is out of reach for more than 90% of Nigeria’s population. But this problem is not just a Nigerian one. Purchasing power for vehicles is abysmally low across Africa, which explains why used cars are common and car ownership is less than 45 cars per 1000 people, compared to 816 per 1000 people in the US. While this problem shows a huge market for vehicle financiers, the reality in Africa is that vehicle financing is dominated by traditional banks and characterised by high interest rates and prohibitive loan criteria, making car loans inaccessible to the average African.
Since Autochek was founded in 2020, the startup has raced to solve the vehicle financing challenge by connecting financiers to creditworthy customers. In two years, Autochek claims it has worked with “more than 70 financial institutions and more than 2,000 dealerships to process more than 80,000 car loan applications.”
Autochek’s model may be more beneficial to average Africans seeking to own cars, as the company is part of the small pool of African startups that provide vehicle financing for non-commercial purposes.
Other players like Max and Moove provide auto financing for gig workers and mobility entrepreneurs who drive to own the financed cars on platforms like Uber and Bolt. Still, Autochek’s model is possibly more prone to customer default as there are generally more difficulties in predicting the long-term financial standing of the average African.
Unfazed by the uncertainty, or perhaps, bolstered by the confidence in their credit-checking systems, Autochek is launching its in-house auto-financing arm dubbed AutoChek Financial Services, which will double down on the company’s efforts to democratise auto-financing for creditworthy Africans. This new arm of the company will operate a B2B and B2C model for vehicle financing in Africa.
“It [Autochek Financial Services] will also provide best-in-class technology and advisory solutions to car dealers, financial institutions and other stakeholders in Africa’s automotive ecosystem, supporting them to improve credit decisioning, collections, pricing, portfolio management and product development, as well as deliver an enhanced customer experience,” Autochek’s statement read.
AutoChek, which has a strong presence in East, West, and North Africa (mostly by acquiring similar companies in these regions), has chosen South Africa as the headquarters of AutoChek Financial Services, where the auto-financing subsidiary will be led by Johan van der Merwe, a financial services expert “with over 20 years experience in risk, credit and asset finance.” Before this role, Merwe had operated as Chief Risk Officer at WesBank Motor—a leading auto-financier in South Africa—and SA taxi, a similar company that integrates insurance into its auto offerings. Merwe brings his experience of Africa-focused automotive and ecommerce business—spanning over 60 years—to his role as CEO of Autochek Financial Services.
“There is a great opportunity to drive shared value for consumers, manufacturers, financial institutions and other stakeholders by unlocking financing, and I strongly believe that we can build the infrastructure to make this happen. Etop [AutoChek’s group CEO] and the team have done a lot of outstanding work to deliver the success Autochek has seen to date and I am looking forward to working with them to deliver more success and more growth across the continent’s automotive sector,” Merwe said concerning his new role.
Etop Ikpe, AutoChek’s Group CEO and co-founder, was effusive about Merwe’s abilities, maintaining that he is well-positioned to work with the broader team to scale Autochek’s vision of making automobile financing mainstream and hassle-free.
“Johan brings a wealth of experience to Autochek Financial Services and we are excited to have him on board as we build the infrastructure to transform automotive commerce across Africa. We want to empower more Africans with seamless access to vehicle financing and we are looking forward to delivering more solutions to bridge the affordability gap and make it easier for more Africans to purchase the vehicles they want,” she said in her statement.
Autochek may have made a name for itself as a reliable player in the African vehicle marketplace ecosystem, but its solutions are only in their infancy. With this foray into full-fledged auto-financing for Africans, Autochek is stepping into a huge, underexplored, and risk-prone market. It will be interesting to see how this pans out for the startup—and, by extension, for auto-financing in Africa.