Elvis Ubaka Canice, co-owner of Elroseandria Automobile and Investment Limited in Lagos, feels he can grow his fleet of 15 vehicles to at least five new locations with present demand.
Elroseandria Automobile and Investment Limited in Lagos, Nigeria specializes in car sales, car parts, and car rental, as well as other services such as importing general merchandise, including keys and locks and security doors.
Owner Elvis Ubaka Canice and his partner started by importing used vehicles and car parts from overseas for sale in the local market. When some clients asked to rent a car instead of buy, they decided to put some of those imported used cars to rent.
Through its sales showroom situated between downtown Lagos and the international airport, the company serves local retail renters, government ministers, and managers in the oil and tire industries, including those on contract from overseas.
A few factors seem to be working in favor of car rental: demand is increasing, as more Nigerians are moving to cities such as Lagos, the largest in Africa, and the Nigerian middle class grows. At the same time, the government has not been able to keep up with demand by expanding public transportation options.
Nigeria, the second largest economy in Africa, is putting an effort into growing tourism and attracting foreign investment. According to Africa Tourism Monitor, international tourist arrivals grew by 7.1% in 2015 year over year — with an expectation to attract 919,000 international tourists, comparable to Honduras and Iceland.
The recent discovery of oil off the shores of the state of Lagos has created opportunities for service providers to the oil industry. While the recent oil price crash has dampened government spending, it has not slowed his business, Canice says.
Elroseandria’s rental business has only 15 vehicles at present, though Canice says he and his partner are looking into expanding to five more cities due to high demand, and they’re looking for a joint venture. “Car rental is a good and profitable business in Nigeria,” he says.
Canice travels to the U.S. frequently to buy and ship used vehicles back to Nigeria. Toyota, Hyundai, and Honda are popular import models. Vehicles stay in the rental fleet for about two years, and then Elroseandria sells them retail and to used car dealers. In Nigeria, resellers care more about vehicle condition than miles, Canice says.
In Nigeria, rental cars generally come with a driver, though it’s possible to rent “self-drive.” To protect against theft, car rental companies use GPS trackers.
Avis, Hertz, Europcar, and Sixt have franchise partners in the country, mostly as subsidiaries to national conglomerates. The Hertz franchisee, for instance, is part of a holding company that includes various forms of leasing, fleet management, staff outsourcing, and rental. Coscharis Group, the Sixt franchisee, spans sectors such as auto, medical, information technology, and agriculture.
Canice says there are many homegrown car rental companies bigger than his. But the market is still dominated by “unorganized” companies of a handful of vehicles, and the line is blurred between taxi services and car rental, as they predominantly offer the car with a driver. These services perform many fee-based one-way trips, such as from the airport to city center, or the driver can be retained for the day.
Canice says profit margins are good. He can request that renters pay upfront, which is beneficial especially for rentals lasting more than a month; a two-month rental is common. He markets the business through word of mouth, brochures, and flyers, and through online marketing, which is increasing in Nigeria.
“Demand is increasing and business is good,” Canice says. “Things are changing every blessed day.”