Mecho Autotech, a Nigerian auto-tech startup offering vehicle repairs, spare parts, and maintenance services, has laid off part its workforce in response to Nigeria’s tough economic conditions. The company, founded in 2021 by Olusegun Owoade and Ayoola Akinkunmi, reduced its full-time staff from a team of 40, with remaining employees transitioning to contract roles. Affected staff will receive one month’s severance pay.
In an email obtained by TechCabal, Mecho cited Nigeria’s inflation and volatile foreign exchange rates as key factors impacting its operations and cash flow. Rising costs of importing spare parts and declining purchasing power have forced many vehicle owners to seek cheaper alternatives, such as roadside mechanics, over Mecho’s premium OEM (original equipment manufacturer) services.
Despite onboarding over 7,000 third-party mechanics and collaborating with clients like Shuttlers, Moove, and Tolaram Group, Mecho has struggled to maintain financial stability. The company’s ambitious plans to transform Nigeria’s fragmented auto repair industry have been hindered by operational challenges. Former employees revealed persistent cash flow issues, delayed salaries, office rent problems, and resignations of key personnel, including finance and sales heads.
In September 2023, Mecho raised $2.4 million in pre-Series A funding to expand its offerings. Plans included developing an app to provide inventory financing, streamline sales, and offer working capital to workshops. However, the app was never launched, raising doubts about the company’s ability to deliver on its goals.
Mecho’s challenges show the broader struggles of Nigerian startups in an economy plagued by inflation, currency devaluation, and declining consumer spending. While competitors like FixIt45 have pivoted to alternative revenue streams, such as compressed natural gas conversion services, Mecho faces an uphill battle to adapt to the economic landscape.
Mecho Autotech’s future will likely depend on its ability to reimagine its operations and explore sustainable models in this ever evolving market.
