Car dealership business

How to Start a Car Dealership Business in Nigeria: A Beginner’s Guide

by Michael Olorunwumi

According to the Nigeria Bureau of Statistics, over 11.4 million cars plied Nigerian roads in 2018 alone. 

Before the end of the calendar, over 200,000 new and used cars (also known as “Tokunbo”) were added to the figure.

This means that the sale of automobiles is a lucrative business in Nigeria. 

A car dealership business in a country like Nigeria comes with a degree of preparation both decision-wise and monetarily.

 You have to first decide if you want to go into the sales of either Tokunbo (UK second-hand used) or new cars, for a start, or both as time goes by. The profit margin and setup capital are different.

Asides from deciding if you want to be selling new or fairly used cars, you also need to decide if sales will be made as a wholesaler or a retailer. 

One who sells cars in Nigeria at wholesale directly buys in bulk at discounts from car manufacturers themselves and has several links to selling to retailers and even wholesalers as well.

Amazingly, a car is seen as a symbol of wealth in Nigeria, and it remains one of the most consumed items in the country. 

So you could be in the diaspora or directly in Nigeria, planning on how to start selling cars.

This guide helps in putting you through establishing your car selling merchandise as a starter. Keep reading.

Car Dealership Business In Nigeria

A car business in Nigeria can be one of the ways you can follow to become your own boss. You can either start with no capital or as low as 50 thousand Naira. 

Lack of money as a startup shouldn’t be a barrier, you can just visit a wholesale car dealer near you, and strike a deal with him, where you get an agreed commission on each of the sales you make.

Another option is to add a reasonable amount of money to the initial price of the car;  in which both parties rejoice when deals are made.

New cars have a higher profit margin than selling a Tokunbo car.

You can make as low as 100k and as high as you can ever imagine, depending on the model and specifications of a car’s brand. 

While for the 50k capital, which is a very little amount to commence a car dealership business in Nigeria, you can just set up an account on any of the most used e-commerce websites in the country like Jumia, Jiji, slot.ng or ajebomarket.com.

Afterwards, you can decide to run sponsored Ads (advertisement) to reach a wider audience and get your automobile sold on time. 

You can also open a Facebook page, professionally set it up, make videos of used or new cars for sale, and upload and boost the post with a little amount of cash (as low as #1,500). 

Trying out other social media platforms like Instagram, TikTok, etc. won’t be bad too. 

Be reminded that it has been proven that video helps to compel social media users to watch due to its power to drive great impact on sales of any product or service. 

Especially when you have it done by a professional, Nigerians will rush your automobile dealership business with orders of cars than Ayra Starr

Read also: How to get followers on Facebook as a Nigerian Business.

How to Start a Car Dealership Business in Nigeria

Here’s all you need to do to become a car dealer in Nigeria; 

  1. Sketch out a business plan

A business plan makes it easy for you to get financial aid from investors.

It also helps you determine how you want to sell your products as a car dealer, your target audience (those you want as your customers), the equipment, personnel (if necessary for a start), your estimated revenue, and the likes.

Thorough research has to be made before you go into the sales of tokunbo or new cars in Nigeria.

Read also: How to start a solar installation Business in Nigeria

  1. Be licensed as a car dealer

All you need to do to become a car dealer with a license is to visit any FRSC office near you, Customs, or the Board of Internal Revenue (FIRS). 

Through any of these, you can get the license which will be of great advantage to your business.

You can choose a specific car manufacturer’s models where you receive direct delivery from the company; all you have to do is to make sales. 

Being licensed also keeps you away from problems attached to not having it. 

The lowest license fee is 100k, it varies in different states in Nigeria. 

Here are the important documents you need to have before you have a successful registration:

  • Plan or layout of the premises of your shop
  • Premises registration proof
  • Business registration proof (with CAC or SME)
  • Fill  dealership form
  • Configuration of safety measures within your shop
  • Business Profile
  • Authentic copy of the company’s name
  • List of identity and application proof of all shareholders and directors
  • Description of vehicles with inventory
  • Payment authentication
  • Any other document (based on request or requirement)
  • Buy A Land Or Garage

This is needed if you plan on starting up on a large scale. Getting a plot of land, at least, or a garage in a public area gives more, easier accessibility. You can start with between 1-50 cars or less. 

You also need to ensure that CCTV cameras or sophisticated security facilities are put in place to avoid stories that touch. 

After the purchase of the land or garage, you will want to spend more on keeping it safe, fencing, light, and other things. 

Sponsor your business on Insight.ng for a wider reach of your target audience. 

  1. Employ staff

You could require one or two drivers that will help in transporting your cars from the shop to the garage.

But if the garage and the shop are in the same place your employed staff make it easy for you to completely take the cars off the sight of people.

Read also: A guide to using Google Keyword planner for your business.

Challenges of Car Dealership Business In Nigeria

Car dealership business in Nigeria is not without some challenges. Some of these challenges include the following;

  • High competition rate
  • Risk of engaging in unprofitable deals
  • Unaffordable permits, bonds, and expenses
  • No loan system for car dealers
  • Acquiring cars with bad condition.
  • Channeling profit to the sales of just a car brand or a group of them
  • High cost of money for starting up.

Conclusion 

Starting a car dealership business in Nigeria would be hitch-free if you make use of the information shared above.

If you’ve got any questions, do so in the comments or reach out to us on Whatsapp.

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About Author

Avatar of Michael Olorunwumi
Michael Olorunwumi
Michael Olorunwumi, is a final year student at the University of Ibadan, studying English language and Education. He is an SEO content writer, spoken word artiste, poet, Kampala textile designer, and rapper.

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2 comments

Avatar of Uchenna Jacob lgweoti
Uchenna Jacob lgweoti December 19, 2023 - 12:22 am

I can start up a car business with you people

Reply
Avatar of Kehinde Babajide
Kehinde Babajide January 22, 2024 - 1:08 pm

Hi, Uchenna
We are not into the car business. You’ve only read a guide to starting one.

Reply

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