How To Become A Car Dealer In Nigeria

This is a detailed guide on how to become a car dealer in Nigeria.

Starting your own car business could be the right enterprise for you if you’ve always dreamed of running your own business and also have a strong interest in cars.

Using a car is the most common mode of transportation in the world, and it is quickly becoming a necessity.

In Nigeria, there are a huge number of people that are car owners. Hundreds of thousands of new and old cars are purchased every day.

Every day, tens of thousands of cars are traded in Nigeria to meet the soaring demand of a burgeoning population of car owners.

To understand how lucrative it is to become a car dealer in Nigeria, you must do it.

Some households have multiple cars, while others have one car for a short period before deciding to change it for another.

Some are purchasing it for the first time. Cars and automobile buyers throng major cities like Abuja and Lagos.

There are some measures you can take to become a successful and lucrative car dealer in Nigeria, whether you want to sell brand new or used cars, locally or globally.

Who Is A Car Dealer?

Car dealers are also known as vehicle local distributors or it is a company that sells both new and used vehicles on a retail level under a dealership contract with a carmaker or its sales division.

It’s also capable of transporting a wide range of Certified Pre-Owned automobiles. It hires car salespeople to help them sell its cars.

There are three sorts of cars that you can deal with as a car dealer in Nigeria. New cars are the first type of car you can sell as a car dealer in Nigeria, but they are pricey since they require a large amount of capital.

Secondly, some car dealers in Nigeria sell tokunbo cars imported from other countries (such as the Cotonou car market in the Benin Republic or the United States) for very low prices.

Nigerian used vehicles are the third type of car you can sell as a car dealer in Nigeria. Selling Nigerian used automobiles is the cheapest out of the three options.

It is recommended that you become acquainted with the business first. Make inquiries with car dealership owners that have been in business for a while.

Only if you are well-versed in the operation of the business will your car dealership be profitable.

Tips on How to Become a Car Dealer in Nigeria

1. Have a Business Plan

Failure to plan is preparing to fail, as the saying goes. The foundation of undertaking any business, including the car dealership business, is planning.

You won’t be able to become a successful auto dealer in Nigeria until you have a good business plan.

There are many factors to consider and important questions to answer in your business plan including how much capital you need to start the car business, location, the number of cars you want to start with, whether you want to start with used or new cars, business advertising strategy, garage and employee costs, how to market the cars to clients or customers, and other processes.

Make sure you don’t leave any stone unturned by considering all options and outcomes. You’re halfway to creating your profitable car dealership after you’ve developed a credible business strategy.

2. Source for Capital

You need to also decide on your capital at this stage. This business is huge and capital intensive. You must examine how you will obtain the necessary funds to start your business.

There are several ways to raise cash, all of which should be properly outlined in your business plan. You can get a loan, to begin with, but it is not recommended.

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You can acquire a grant, money from friends and relatives, or raise the cash yourself if you already have a job that pays you regularly.

You can start with a small number of cars and scale up as your business expands.

Even though it’s a franchise, the size of the company may differ depending on the terms of the agreement reached within the company.

The pricing of the main items you’ll need to start your car dealer business must be listed in the business plan.

3. Pay for a Car Dealership License

For you to become a car dealer in Nigeria, you must first apply for and pay for a ‘Car Dealership License.’ It recognizes you as a legitimate car dealer, which comes with a slew of benefits.

You can then become a franchise of a specific corporation, selling exclusively their automobile models.

There are bidding sites that only allow certified merchants and where you can find unbelievable bargains.

The road safety offices in your local regions can provide you with information on the registration process and other license-related matters.

Certain requirements must be met to obtain a car dealership license. These requirements/conditions are highlighted in this article.

Obtaining a car dealership license in Nigeria necessitates taking specific steps. These steps are a requirement for obtaining an operating license.

As a result, meeting these conditions is critical. However, there is currently no central licensing agency for vehicle dealerships.

As a car dealer in Nigeria, you should understand that each state has its licensing method and requirements. When comparing states, these differences are not all that substantial.

The following are the prerequisites for obtaining a car dealer’s license:

i. Sufficient Start-Up Costs

This is a critical point. To qualify for a car dealership license in Nigeria, you must meet certain financial requirements.

This is something that potential investors should be aware of. Becoming a car dealer in Nigeria necessitates a significant financial investment.

If there are not enough proofs of finance or funds for the business, this business could be disqualified altogether.

Payment of licensing fees (unverified) is also required as part of the terms and conditions.

It’s also beneficial to have some type of creditworthiness. The investor can seek a loan to fund this firm because he or she has good credit.

ii. Financing Arrangement

The financing structure is a significant consideration to make. The business’s funding source should be clearly stated.

The Source of financing of any business should either be personal savings or a bank loan. In any event, obtaining sufficient funding is critical to the business’s success.

The size of the car business is determined by how much money is raised as capital for the business. This has an impact on the sort of license obtained.

iii. Knowledge of the Auto Industry’s Regulatory Framework

Knowledge of the car industry’s regulatory framework simply means that before seeking licensing, a car dealer in Nigeria must be possessed with the knowledge of the regulatory framework guiding the industry.

It guides the complete process of beginning a business by having the correct expertise. This is in addition to putting the appropriate pieces in place, which includes licensing.

This knowledge will be useful during the application procedure for a driver’s license.

iv. Establishing Contact with Suppliers

Every business must create a solid relationship with its suppliers to succeed. The business’s success rate will decline if it does not have reliable suppliers. As a result, the car dealership requires a solid supplier relationship.

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This promotes a positive working environment between the car dealer and the supplier, which in many cases results in large discounts that are beneficial to the business.

Due to the presence of this critical need, the company will be seen as robust and ready to apply for a license.

It is crucial to note that this is not sufficient in and of itself. Additional preparations are required to launch a successful car dealership business.

4. Source Your Cars

You may find cars to sell in a variety of ways. One of the ways to source cars is through International Auctions. As a licensed dealer, you have access to a variety of bidding platforms.

You might also get your cars at Cotonou, which is where the majority of car dealers in Nigeria are located.

Buying a car in Cotonou relieves you of the stress of shipping it from wherever you bought it.

You could also look into franchise agreements with automobile companies or manufacturers. Thus, you can become a dealer for that brand and benefit from the greatest prices on their automobiles.

Some dealerships buy locally used cars from local dealerships. If you’re in the market to buy or sell cars, you’ll find a large group of potential buyers.

When looking for low-cost investments, this pool is a fantastic place to start. However, it is important to ensure that the cars are in proper working order.

5. Find a Space and Garage

This area could be in the form of a garage or a plot of land. It could be directly in front of your house provided you have sufficient parking space.

Ascertain that your parking space performs well enough to keep your car(s) visible and protected from heat. Your car must remain in excellent selling condition, which means that your storage area should be free of damage and theft.

Locking the cars in the garage will not be enough. It will also require a showroom or a plot of land to display your vehicles for sale to prospective clients and customers. This strategy is increasingly widespread among car dealers in Nigeria.

A garage may be required if the shop lacks the necessary space and facilities to accommodate a car. The garage structure could be constructed of steel and feature a high-rise ceiling similar to that of a steel warehouse structure.

Also, it might be situated in a different location from the actual place where your car dealer shop is or maybe a short distance drive.

The garage should have good security measures in place or you can have CCTV cameras installed in showrooms and other locations in your garage to avoid theft.

6. Purchase Your Cars

When you are a certified car dealer in Nigeria, you have access to the auction and bidding sites, you can save money by purchasing a car at auction.

You can also buy cars at the Benin Republic or Cotonou and drive them to Lagos, where it is now permitted to import vehicles via the Lagos ports. You might hire a driver to transport the vehicle to its final location.

When you purchase a car from a foreign country, you can do it with the phone online through bidding sites that offer international auctions.

There are trusted sites that allow certified car dealers to carry out these purchases much like you would if you were purchasing something from Amazon. is one of those sites. You can visit the site and fill in your shipping address, and other vital information that will be required to be filled out due to customs clearance.

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Another option is to franchise a specific brand of automobile, in which case the company would manage all of the logistics for you.

Yours will be a simple matter of selling and reordering. That arrangement, on the other hand, may only be made if you are dealing with brand new automobiles.

7. List all the Cars Online

Many major websites allow you to post classified adverts for the cars in your inventory. Sites like Jiji, Nairaland, and Olx are good places to put your cars for sale online because they’ve got a wide audience.

If you’re a car dealer in Nigeria, you have to put your vehicles up for sale on sites where other dealers are doing the same and wait for clients to come through.

When publishing online, some of these websites require you to fill out certain fields, while others allow you to do so at your discretion.

Add your location while filling out the form as a car dealer in Nigeria online because it is important to do so.

Customers do prefer buying from a car dealer or stand that is closer to them to escape paying exorbitant fees for car delivery.

Always remember to include high-quality photos of the car together with a short description, that talks about its model and mileage as well as flaws, custom-made upgrades, and any other information you feel is relevant while advertising your cars online.

While listing the cars online it is important to also fill in your contact information. But they are the most important ones when it comes to putting your thoughts out there.

Most websites allow you to place an ad for free, but if you have the opportunity, you should go with a paid advert.

Your advert would be prominently displayed and promoted on the site and would appear at the top of search results.

To get the most out of your paid advert, you should run it for at least a week. This will enable you to sell quickly as a car dealer in Nigeria.

8. Get Insurance

To become a successful car dealer in Nigeria, you should not overlook the importance of getting insurance.

This is critical because you’ll be entering a highly capital-intensive and risky business. General liability and lot coverage are among the policies covered by insurance.

In addition, having insurance will keep your auto dealership functioning even if you experience a fatal problem that could have a devastating effect on your business operations.

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9. Hire a Staff

If your auto business has grown to a reasonable extent, you can consider recruiting some workers or an additional hand in the business at this moment.

You’ll need help with tasks like driving the automobiles in and out of the garage and parking them, as well as cleaning and selling the cars. On occasionally even repairs of the automobiles.

It is pertinent to look for someone who has worked with automobiles before when hiring someone.

The measures outlined above provide a step-by-step guide on how to become a car dealer in Nigeria.

Don’t hesitate to imbibe these measures if you are seeking to become a successful car dealer in Nigeria.

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