Automotive

Ghana’s automotive industry was originally made up of retailers and importers of used vehicles and a few dealerships of new vehicles. Ghana imports about 100,000 vehicles into the country annually out of which about 90% are used cars. This is valued at about US$1.14 billion and represents about 12% of the country’s import bill. The three main countries where these vehicles are imported from are the USA, Japan and Germany.

Ghana’s automobile sector was valued at about US$4 billion in 2020 and expected to reach about US$11 billion by 2026.

In its efforts to take advantage of this growing industry, the government identified the Assembly and Automotive Components manufacturing as a strategic anchor industry and thus developed The Ghana Automotive Development Policy (GADP) in 2019 which is meant to provide the necessary framework for the establishment of this sector in Ghana.

The policy aims to transform Ghana into an industrial hub for the automotive industry in West Africa which will subsequently create highly skilled jobs and save foreign exchange as the importation of used vehicles is reduced. This is then ultimately to bring in more revenue into the country through the export of assembled cars from Ghana.

The future of the automotive industry in Ghana looks promising as there has been assembly agreements between Ghana and some Original Equipment Manufacturers (OEMs) such as Volkswagen AG, Nissan Motor Company, Toyota Motor Company and Suzuki Motor Company. The Semi Knock Down (SKD) process used by these manufacturers also allows them to save taxes in the destination country. Many countries like Ghana, levy more than 100% tax for fully imported products such as vehicles, so the cost of these vehicle increases in such countries. However, for “Semi Knocked-Down” units, the tax rate is different.

The only local company, Kantanka Automobile Company Limited, which assembles the Kantanka range of vehicles from CKD (Completely Knocked Down) kits from China, is therefore the only real Ghanaian producer of new vehicles, which shows the vitality of the sector in Ghana.

In summary the long-term goal is to produce for the Ghanaian market, and develop into a hub to serve the West African Sub-region. The automotive manufacturers look forward to taking maximum advantage of the African Continental Free Trade Area (AfCFTA) agreement for the exportation of assembled cars to other African countries.

Given the significant evolution of the industry worldwide, Ghana is also restructuring in terms of volume, scale and complexity to adapt to the mobility of the future. Today, the major European automotive groups are vertically reorganizing their used car market in order not to miss out on this market which, in certain segments, now exceeds the new car sales in Europe. The used car market, which represents more than 80% of the sector in Ghana, is certainly a sector of the future and it is almost certain that initiatives like those already undertaken in France will eventually see the light of day in sub-Saharan Africa.

With this perspective, we can leverage on the country's strengths in the automotive sector, and particularly on the booming spare parts sector, of which Suame Magazine in Kumasi is the most telling example. A regrouping of the actors specialized in this field associated with the general reflection on the second-hand car sector, can move a good part of the actors out of the informal sector and thus contribute to the increase of the quality of second hand cars put on the market.