Ghana’s automotive industry has been dominated by imported vehicles over decades. However, in 2018, the government decided to enhance the automotive sector by facilitating the establishment of car assembly plants by renowned car manufacturers like Volkswagen (VW), Nissan, Toyota, Suzuki, Sinotruk, and Peugeot.
The government played a crucial role in attracting these automakers by introducing the Ghana Automotive Development Policy in 2019. This policy provided incentives for automakers to set up local assembly plants and aimed to reduce the country’s reliance on imported vehicles. The establishment of these assembly plants marked the beginning of Ghana’s efforts to build a local automotive industry, aiming to create jobs, reduce vehicle importation costs, and foster industrialization.
This initiative has brought about a growing competition between car import dealers and car assembly plants in Ghana. Both sectors believe they are striving regardless of the factors that might hinder some demands of their goods. This competition is shaped by several factors, including price, consumer preferences, government policies, and the economic environment.
Traditionally, imported used cars have been more affordable than new cars, making them popular among Ghanaians. These vehicles often come at lower prices due to depreciation and the availability of a wide range of models and brands. On the other hand, car assembly plants in Ghana are producing new vehicles, which tend to be more expensive than used imports. However, government incentives such as reduced taxes and tariffs on locally assembled cars can help lower their prices, making them more competitive against imports.
Secondly, many consumers in Ghana prefer imported used cars because they offer a cost-effective option and a wide variety of choices. However, as locally assembled vehicles become more available, some consumers are beginning to consider the benefits of buying new, locally produced cars, such as warranties and after-sales services. Some consumers have strong brand preferences, and while imported cars offer a variety of international brands, locally assembled vehicles often focus on specific brands that have invested in Ghana’s assembly industry for instance VW, Toyota, and Nissan.
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Thirdly the government has implemented policies to encourage local vehicle assembly, such as tax breaks, incentives for automakers, and restrictions on the importation of older vehicles. These policies aim to create a favourable environment for local production and reduce the country’s reliance on imports.
Speaking to Abu Mohammed, a car import businessman in Accra, he mentioned that the “government’s support for local assembly puts pressure on car import dealers because we face higher duties and stricter regulations on imported vehicles. This can make imported cars more expensive and less attractive compared to locally assembled car brands.”
“While imported cars, especially used ones, are popular, they can sometimes come with issues related to their condition, leading to sometimes high maintenance costs after purchase. This can be a disadvantage compared to new, locally assembled vehicles that come with warranties and better after-sales support”. He noted.
There was an initial perception of locally assembled cars in Ghana being cheaper as compared to the imported ones due to zero duty taxes and other import charges. However, captains of industry in the car assembly plant business have refuted such claims especially when compared to used imported vehicles. However, they can be more competitively priced than new imported vehicles due to certain advantages provided by government policies. In essence, used imported cars are generally more affordable than both new imported and locally assembled vehicles. These vehicles have already depreciated, making them attractive to buyers looking for lower prices. As a result, used cars dominate the market in Ghana.
While, locally assembled vehicles are new, which typically makes them more expensive than used imports. However, the price difference can be balanced by factors like lower maintenance costs, warranties, and the benefits of driving a new car. Industry players also noted that consumers might perceive locally assembled cars as offering better value for money due to the benefits of buying a new vehicle like reliability and warranty. This can make them competitive even if they aren’t the cheapest option in terms of upfront cost.
There is indeed competition between car import dealers and car assembly plants in Ghana. While imported vehicles, particularly used ones, continue to dominate due to their affordability and variety, the growth of local assembly plants, supported by government policies, is gradually shifting the market dynamics. This competition is expected to intensify as the local assembly industry expands and consumers weigh the benefits of buying locally-produced vehicles against imports.
To this end, though locally assembled cars in Ghana are generally not cheaper than used imported vehicles, they can be more affordable than new imported cars. The government incentives and lower duties on parts help make locally assembled cars more competitively priced, especially when considering the long-term benefits of warranties and lower maintenance costs. However, the dominance of the used car market means that price-sensitive buyers often still opt for imported used cars.
