Owning a car is out of reach for more than 90% of the Nigerian population. But this problem is not unique to Nigeria. Purchasing power for vehicles is appallingly low across Africa, which explains why used cars are rife and car ownership is less than 45 cars per 1000 people, compared to 816 per 1000 people in the US. While this issue demonstrates a huge market for vehicle financiers, the reality in Africa is that vehicle financing is dominated by traditional banks and is characterized by high interest rates and prohibitive lending standards, making auto loans inaccessible to the average African.
Since founding Autochek in 2020, the startup has sought to solve the vehicle financing challenge by matching financiers with creditworthy customers. Autochek claims to have worked with “more than 70 financial institutions and more than 2,000 dealerships to process more than 80,000 auto loan applications” in two years.
Autochek’s model might be more beneficial to average Africans looking to own a car, as the company is part of the small pool of African start-ups that provide vehicle financing for non-commercial purposes. Other players like Max and Moove provide auto financing for gig workers and mobility entrepreneurs who purchase the financed cars on platforms like Uber and Bolt. Still, it may be more vulnerable to customer defaults, as it is generally more difficult to predict the average African’s long-term financial condition.
Undeterred by the uncertainty, or perhaps bolstered by confidence in their credit-checking systems, Autochek is creating its own auto finance arm called AutoChek Financial Services, which will redouble the company’s efforts to democratize auto finance for credit-worthy Africans. This new entity will operate a B2B and B2C vehicle financing model in Africa.
“It [Autochek Financial Services] will also provide best-in-class technology and advisory solutions to auto dealers, financial institutions and other stakeholders in the African automotive ecosystem, helping them improve credit decisions, collections, pricing, portfolio management and product development, and deliver an enhanced customer experience,” Autochek said in a statement .
AutoChek, which has a strong presence in East, West and North Africa (mainly through acquisitions of similar businesses in those regions), has chosen South Africa as the headquarters of AutoChek Financial Services, where the auto finance subsidiary will be headed by Johan van der Merwe, a financial services expert “with over 20 years of experience in venture, credit and asset finance”. Prior to this role, Merwe served as Chief Risk Officer at WesBank Motor – a leading car finance company in South Africa – and SA Taxi, a similar company that integrates insurance into its car offering. Merwe brings over 60 years of experience in the Africa-facing automotive and e-commerce business to his role as CEO of Autochek Financial Services.
“There is a tremendous opportunity to increase shared value for consumers, manufacturers, financial institutions and other stakeholders through unlocking financing, and I strongly believe we can build the infrastructure to make that happen. etop [AutoChek’s group CEO] and the team have done a lot of outstanding work to achieve Autochek’s success to date and I look forward to working with them to achieve more success and more growth across the continent’s automotive sector,” said Merwe of his new role .
Etop Ikpe, Group CEO and co-founder of AutoChek, was enthusiastic about Merwe’s capabilities and claimed he is well placed to work with the broader team to expand Autochek’s vision of making auto 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 retail across Africa. We aim to give more Africans seamless access to vehicle finance and look forward to providing more solutions to close the affordability gap and make it easier for more Africans to buy 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 market ecosystem, but its solutions are still in their infancy. With this foray into full-fledged car financing for Africans, Autochek enters a huge, under-researched and risky market. It will be interesting to see how this affects the startup – and by extension, auto financing in Africa.