Japan-based auto businesses are building up inventory of used cars for exports to Africa, a market with the world’s highest growth prospects.

Auto marketplaces operator Zigexn Inc. launched an online service to buy used cars from individuals and dealers, repair and prepare them for exports to the African market. Car trader Idom Inc. is going a step ahead and also addressing financial constraint, a main obstacle for African consumers, by providing financing for purchase of used cars.

Idom extended its collaboration with SBI Africa, a part of internet financial group SBI Holdings, to remove financial barriers for African auto consumers.

Under the agreement, Idom procures used vehicles in Japan and sells them to SBI Africa, which then exports them to Africa through its cross-border e-commerce site SBI Motor Japan. SBI Motors anticipates export of up to 10,000 units per month to Africa in near future.

Also participating in the alliance is Fleet Management Global (FMG), which Idom established last year after spinning off its African business.

In cooperation with vehicle dispatch service companies and banks, FMG helps people get credit to buy Japanese used cars in Africa.

Weak buying power is one of the reasons behind low car sales in Africa, which are only one percent of new cars sold in the world. Used car sales are estimated to be 10 times of over one million new cars sold in a year. Sales are also affected by low access to financing, according to Mordor Intelligence.

The growth prospects are high with Africa “the ultimate destination for some 40% of used light-duty vehicles,” said a U.N. report.

Competing forces

Along with Japanese businesses, multinational players including Ringier One Africa Media, Frontier Car Group, Cars On The Internet, Prosus and YallaMoto have also entered the region’s auto market.

They have better consumer-facing programs to improve user engagement. However, Idom and Zigexn have relatively strong supply lines.

Idom has more than 500 stores in Japan, while it also operates in the U.S. as Gulliver USA and in Australia through its majority stake in automotive company DVG.

Zigexn buying cars for exports

Zigexn launched Sell.tc-v.com earlier this month to determine the value of vehicles that have been scrapped, involved in accidents or are well-traveled, and purchase them for exports.

The assessment is free for individuals and has certain fees for auto dealers. Users can fill out an online form to provide details and request assessment nationwide. Sellers can decline the offer after assessment.

Zigexn already runs auto marketplace and car buying service Kuruma-ex.jp. Since the acquisition of Tc-v.com from Yahoo Japan in 2018, the group has improved its efforts to increase cross-border sales.

Tc-v (formerly Tradecarview.com) connects used-car dealers to more than one million overseas customers, mainly in Africa, a market the company always prioritizes for overseas business. Africa’s used-car market is estimated to be 10 times that of the new car market.

Zigexn hit a record for quarterly sales at $34.6 million U.S.. The company’s move coincided with consolidation of auto trade businesses in Africa. Autochek acquired Cheki Kenya and Cheki Uganda from Roam Africa.

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