Elo-Ex Transport Advisory Services – Before you put that car on Uber…

Aug 18, 2018 By Alex Okoh 1 Comments

Given the current e-hailing rider app prices in Lagos, it is important that you consider many factors before investing to ensure you maximize your profits within the budgets available. Be sure to consider the following;

  1. Buy a tokunbo (foreign used) car

Brand new cars are very expensive today (upwards of 6m). It will take more than half a decade to break even on a brand-new car. Unfortunately, locally used cars are hardly well maintained and are usually put up for sale because the car has major issues. Locally used cars are a “NO NO !!!” for the e-hailing business.  Given the amount of work to be done, a tokunbo car will give you less issues and an opportunity to start on a clean state and ensure you maintain your car well to last longer.

You can check the VIN of the car on online sites to get the cars history before buying it.

  1. Check for the catalyst

One of the latest trends in Lagos is that the catalysts of imported cars are taken out to be sold separately. Be sure to have a mechanic check this before buying. The catalyst is directed related to fuel consumption and fuel expenses has a major impact on the final earnings you make.

  1. No need for big engines… Its not a race contest

Because about 35 to 50% of the money you make on e-hailing rider platforms goes to buying fuel, be sure to get a car with a small and efficient engine. A 1.6 or 1.8l engine is appropriate. This is one reason why drivers prefer Toyota Corolla cars

  1. Spare parts availability?

Be sure to buy a car that has spare parts readily available in the Lagos market, and have one or two mechanics that can work on the car brand you buy. This is very important.

  1. Make provision for insurance

Comprehensive guards against mishaps like theft, burglary, floods etc. Insure your car comprehensively from a responsive insurance house. Avoid insurance agents as they usually cause delays when you have o make claims and you usually would not get full payments on claims.

  1. Track your car

A tracking device on your car would save you business time wasted on police investigations and processing insurance claims if your car is stolen. Besides, if your car is stolen and the tracking device cannot be used to locate your car, the tracking company can be held liable by law.

If you are not going to be driving the car yourself, what about the driver?

  1. Fully verified and traceable

The driver you are engaging must be verified. There are companies that can help with identity and address verification. The driver must also provide at least two guarantors who should also be verified.

  1. Contract documents

The driver and guarantors must sign water-tight contracts with clearly defined terms and conditions. The guarantors must also agree to unconditionally indemnify the driver if he defaults or does anything to disrupt the business

  1. Inventory

Take an inventory of easily removable parts of the car like batteries, car mats, fire extinguisher, c-caution etc. The inventory document must be signed by the driver before giving out the car. A lot of drivers have formed the habit of taking out vital car parts whenever they want to return the car to the owner. You might want to consider putting stickers on these parts for proper identification.

  1. Inspections and maintenance

Make provision for periodic inspections of the car either by yourself or your mechanic to ascertain if the driver is misusing the car. Checks for body dents, sounds from the linkages and brakes should be done from time to time. Ensure your car is also services with the right type of oil and filter at the right time.

This is not an exhaustive list but a few things to consider when going into the business.

Above all, have a good understanding of the business and its profitability. The major issue today is that car owners believe the business is so profitable and as such expect the driver to make large and impossible returns. Consider driver expenses like fueling, phone calls, and data, and a take home wage vis-a-vis average weekly earnings by drivers in the industry before deciding on a price to be paid weekly or monthly by your driver.

 

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