Automobile

How To Start Engine Oil Business In Nigeria

Business Overview and Profitability

Engine oil has a myriad of uses in the Nigerian market. It has both domestic and industrial usage. Engine oil is a highly sought-after consumer product in automobiles and industries.

The level of investment in this business increases by the day and there is no foreseeable loss rate yet. This is because of the fact that the product never (or hardly) gets spoilt, irrespective of how long it stays.

It has been referred to in the marketplace as a Fast-Moving Consumer Goods (FMCG). This name clearly explains the nature of the business.

All you need to succeed in this business is proper packaging and advertisement. After this, business commences, and profits begin to roll in.

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How To Start Engine Oil Business In Nigeria
Engine Oil Business in Nigeria – Photo Source: http://www.autotech.cn/product

The Typical Target Market For Engine Oil Business In Nigeria

This includes the following:

1. Vehicle users,

2. Drivers,

3. Auto mechanics,

4. Industries,

5. Engine oil retailers,

6. Vehicle spare parts dealers/sellers and,

7. The entire public.

Types of Engine Oils You Can Sell In Nigeria:

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1. Motor Engine Oil

Motor Engine Oil is one of the most commonly consumed oils or lubricants. There are different grades of Motor Engine Oil.

We have 5W 30 and 5W 40 grades respectively. This grading depends on the manufacturer of the oil and the components of the oil

The demand for motor engine oils depends on the vehicles available in a town or city. Since it is required for all vehicles and auto mechanics, there is a high level of competition in the sales of this oil.

The fact that cars must change oil from time to time makes this business an evergreen business. you will always get patronage no matter where you operate from.

2. Automatic Transmission Fluid

This kind of oil is needed by cars with automatic gearing system. DW (ZF), Dexron and Mercon are some of the specifications of automatic transmission fluid.

These specs depend on the manufacturer. This oil, just like the motor engine oil will be changed once expired, according to the manufacturer’s specification. But this is not as frequent as that of motor engine oil.

3. Break and Clutch Fluid

Another form of car lubricant is break and clutch fluid. It has similar manufacturer specification for other oil. They come usually as Dot 3 and Dot 4 and are designed for vehicles which make use of manual gearing systems. They have a high buying propensity, just like the other oils.

4. Diesel Engine Oil

Diesel engine oils, just like petrol engine oils are in high demand in Nigeria today. They find usefulness not just in motor vehicles, but in heavy industrial machines as well.

They come with the 15W 40 specifications and are thicker in viscosity due to the heat produced by engines which us them.

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Business Prospect and Profitability Outlook

Engine oil business is a profitable business to do in Nigeria. As a fast-moving consumer good, it has been estimated to have a 20% profit capitalization as Returns on Investment (ROI) few months after startup.

An investment of N200,000, for example, can yield about N40,00 as profit (minus capital). This figure is expected to triple within a month, depending on the level of patronage.

As you stay longer in the business and employ feasible marketing strategies, you are bound to make more returns on your investment.

Finance and Budgeting

a. An initial investment in stock: N200,000

b. Business name registration: N40, 000

c. Cost of renting a store or warehouse (depending on location): N100,000

d. Feasibility Studies: N60, 000

e. Publicity and Marketing: N50,000

f. Miscellaneous: N50,000

Total: N500,000

Conduct A Feasibility Study

To gather the opinion and demands of your potential customers, it is important that you conduct a feasibility study.

Your target audience should, therefore, include vehicle users, drivers, auto mechanics, industries, engine oil retailers, vehicle spare parts sellers and the public.

The type of vehicle used where you plan to site the business will determine the type of engine oil you should sell.

Read Also: 9 Ways To Join Oil and Gas Business in Nigeria with minimal capital

Developing A Working Business Plan

You need a working Engine Oil business plan to make this business work. This is a documentation of your feasibility study outcomes and projections for success. It is arguably the determinant of your business lifespan and survival.

It is in your business plan that you will document the estimates of the cost of engine oil products. This invariably will be done according to the level of importance.

It is here, also, that you document your expected profits and how to achieve this. You will also document strategies on how to get customers.

Where you cannot develop the business plan on your own, consider hiring an expert to help develop one. We offer that service on this site. Contact us if you need one.

Rent A Warehouse/Shop For The Business

It is advisable to rent a shop or warehouse for a start. How large this should be will be determined by how big you want to start. This, in turn, depends on your start-up capital.

Once you have rented and set up your shop, divide it up into compartments using dividers and shelves. This will make it easy for you to easily get access to the specific product that you need.

Buy Stock

There are several Oil and gas companies which supply engine oil in Nigeria. Look out for the viable ones and get connected for supplies.

Try to maintain a good working relationship with your suppliers. Target sellers of high-quality engine oils because when you buy cheap, the likelihood of selling at a lower rate is there.

Get A Truck

You may need to get a vehicle for supplying your engine oil to customers. That means you will have to get a good driver who can also serve as sales personnel. This is more like killing one bird with one stone. It is an effective marketing strategy.

Basic Cautionary & Safety Tips

Ensure that the area and your shop well secured against theft and burglary. Do not site your shop where there is too much sunlight or exposure to heat. Heat can decompose and spoil your product. Also, exposing your engine oil to moisture, water and rainfall is not a good idea. Avoid it.

Also, ensure that fire-alarm systems, as well as fire extinguishers, are installed in your engine oil shop or warehouse. no-smoking zone, please. Place signs in and around the shop to discourage any form of ignition. Also, see to it that safety practices are duly followed by your staff (if any) and customers.

Sustainability and Marketing

You need to create a meaningful awareness of the existence of your business. you can have a clue about what your target market is from your feasibility study.

Target automobile mechanics and manufacturing industries which use engine oil. Also, advertise to drivers and auto mechanics.

You can even slightly drop your pricing from the outset. This is to gain the market share. As you gain more audience, you may steadily increase your price to maximize the market.

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Summary

Mechanic workshops are always flooded with cars, and among the services rendered there is oil replacement. Engine oils are needed to lubricate parts and service engines. As such, engine oils will always find usefulness in the Nigerian automobile industry.

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Ekemini Ekpo

Ekemini Ekpo is a Content Developer at InfoGuideNIgeria.com. InfoGuide Nigeria is a team of Resource Persons and Consultants led by Ifiokobong Ibanga. Page maintained by Ifiokobong Ibanga. If you need a personal assistance on this topic, kindly contact us.

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