Why Lagos corporates are ditching fleet ownership for car rentals – Muvment CEO

The Lagos car rental market has expanded beyond traditional chauffeur-driven services into a broad ecosystem serving corporate mobility, airport transfers, tourism, self-drive rentals, and event transportation.

Rising vehicle acquisition costs, higher financing expenses, fuel prices, and maintenance requirements have also increased the pressure on fleet owners to keep vehicles on the road and generating revenue.

At the same time, demand patterns are evolving as businesses increasingly opt to rent vehicles rather than own and manage fleets, while operators seek new ways to improve utilisation and reduce idle time in a highly competitive market.

In this exclusive Nairametrics interview, the Chief Executive Officer and Co-founder of Muvment, Chinazom Arinze, discusses how the Lagos car rental market is structured, the economics of fleet ownership, vehicle utilisation trends, pricing dynamics, and the segments attracting the strongest demand.

Arinze also shares insights into the profitability challenges facing operators, the growing role of vehicle financing, the industry’s gradual shift toward digitisation, and why some vehicle categories struggle to attract consistent bookings despite their premium positioning.

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Nairametrics: How is the Lagos car hire and rental market structured today, and how does demand actually move between these segments?

Chinazom Arinze:

The Lagos car hire market is made up of independent fleet owners and informal operators. However, they are always looking to keep their cars busy because, on their own, they do not have enough demand to keep the vehicles active every day.

For most of them, these vehicles are financed with bank loans, so they need to ensure the car is generating money every day to cover financing costs, vehicle maintenance, fuel, and also make a profit.

That is why the ones that are informed put their cars on platforms like Muvment so they can access more customers and a wider pool of demand.

Nairametrics: What are the main components that determine the final rental price a customer pays in Lagos, and how do these typically split between operating costs and margin across different vehicle categories?

Chinazom Arinze:

The main factors that determine the final rental price are the model and brand of the vehicle. SUVs are typically more expensive than sedans due to higher acquisition and operating costs.

However, rental pricing is not fixed in the market, as different vendors apply different pricing approaches depending on their cost structure and demand levels. In terms of profitability, some operators target a 20–30% margin, while others operate at different levels depending on utilisation and financing pressure. For us, we work with a 20% margin.

Nairametrics: What are the dominant use cases for rental vehicles in Lagos today, and how has demand evolved compared to a few years ago?

Chinazom Arinze:

Businesses are increasingly renting vehicles instead of buying, as they realise that their cash is better used to grow their core operations.

Rather than buying cars, setting up maintenance teams, and hiring drivers, businesses now prefer to outsource mobility and logistics needs for a rental fee.

This trend has grown over the years because businesses have seen clear savings in both cost and operational effort.

We also handle tourists. There are business tourists coming into Nigeria, particularly Lagos, and I believe this segment will continue to grow over time.

Nairametrics: What does a healthy utilisation rate look like for a rental vehicle in Lagos today, and how does idle time typically affect operators?

Chinazom Arinze:

A utilisation rate of about 25 days out of 30 is generally considered very healthy in the Lagos rental market. However, what is considered healthy still varies across operators depending on fleet type and business model.

Idle time in Lagos is relatively low for well-positioned vehicles, especially when operators are able to tap into consistent demand from businesses, expatriates, and tourists. In such cases, vehicles rarely sit idle for long periods. However, idle time becomes more significant when a vehicle is not consistently in demand. This is usually linked to positioning within the wrong segment of the market.

For example, executive sedans and SUVs tend to have steady demand, and ultra-luxury vehicles also attract a specific market. But some mid-tier luxury vehicles often sit in a weaker demand band. If an operator buys something like a Mercedes-Benz GLE, they may not get consistent bookings compared to either higher-end or more commonly requested categories. As a result, these vehicles can experience longer periods between bookings despite their relatively high acquisition costs.

Nairametrics: Across different vehicle classes, what does a typical revenue range look like, and how does that compare with the full cost structure required to keep a vehicle active and compliant?

Chinazom Arinze:

Based on industry experience, a sedan can generate between N1 million and N1.5 million per month. Mid-range SUVs such as Toyota Highlanders typically generate between N2 million and N2.4 million, while higher-end SUVs can generate around N3 million or more monthly.

When you compare this with the cost structure, there is generally room for profit, but it depends on efficiency and utilisation. For a sedan, maintenance may cost around N200,000 monthly, although in some months it may be lower or negligible depending on usage and condition.

Fuel is a more consistent cost driver, and operators can spend between N20,000 and N30,000 per day depending on mileage and usage intensity.

Nairametrics: Which cost drivers are currently putting the most pressure on operators, and how have these shifted over the past 1–2 years?

Chinazom Arinze:

The main cost driver putting pressure is vehicle acquisition cost—it is extremely expensive. Maintenance is also quite expensive and of course fuelling.

Over the past year, in terms of fuelling, there has been a noticeable influx of electric vehicles (EVs) into the country and the car rental space, and I believe the trend will continue to grow, which may reduce fuel costs for operators with EVs in their fleet.

On vehicle acquisition, it is still capital intensive as before. However, operators are increasingly relying on financing, and over the past year or two, there have been more affordable financing options available.

For insurance, operators usually pay about 5% of the vehicle’s actual value annually. However, if they use platforms like Muvment, they can benefit from insurance that covers cars and rides booked on such platforms, paying per trip—usually a few thousand naira from their earnings.

Nairametrics: How far has the industry moved toward digitisation in booking, dispatch, and fleet management, and where does manual or informal coordination still dominate?

Chinazom Arinze:

The industry is still fairly informal, and that is the gap Muvment is addressing—digitising booking, dispatch, and fleet management through its platform, which is what operators on the platform benefit from.

When they sign up, they are able to digitise bookings, manage dispatch, track their fleet, set vehicle availability, and schedule maintenance.

Nairametrics: Where in the value chain do most operators lose profitability in the Lagos car rental market today?

Chinazom Arinze:

Most operators lose profitability during the maintenance cycle.

Some vehicles are not properly maintained, and sometimes when maintenance is done, it is not done correctly the first time, so they have to go back for rework. This leads to repeated costs and significant losses.

Nairametrics: What is the range of in-demand vehicles in the Lagos rental market in terms of acquisition value and average maintenance cost?

Chinazom Arinze:

For in-demand vehicles in the market, you can get a Toyota Prado for between N60 million and N80 million, and those Prados can earn about N4 million to N5 million monthly.

For sedan cars, you can buy a Toyota Camry for about N15 million, and it can earn around N2 million to N3 million monthly.

Maintenance costs for Prados are usually not very high—if you buy a good one, you should not spend more than N200,000 to N300,000 monthly. For a good Camry, you should not spend more than N100,000 monthly.