The Chairperson and Managing Director for Volkswagen (VW) Group South Africa, Martina Biene, according to the Business and Financial Times report, has lamented over the sluggish uptake of locally manufactured vehicles.
The report noted that in 2023, a total of 6,000 locally manufactured or assembled cars were sold, but to Madam Biene, whose outfit operates the VW Assembly plant in Accra, the development is detrimental to the industry’s investment prospects.
According to her, the Volkswagen Group has already invested about US$54 million in establishing its Semi Knocked Down (SKD) production plant in Accra-Tema, with an installed capacity to produce over 12,000 vehicles per annum. However, low demand for brand new cars could affect future investments if the government fails to efficiently implement some policy decisions.
On how to boost the adoption of domestically manufactured or assembled vehicles, she expressed hope that the government would restrict the importation of salvaged cars, a move endorsed by the industry.
She added that the Ghana Automotive Development Policy (GADP) is an outstanding document, but without enforcement of two key elements of the policy – the ban on second-hand cars and mortgage facilitation for credit purchases, the industry’s potential would be undermined.
“The promising progress of the automotive industry in Ghana is the envy of other African countries, especially in West Africa. However, Ghana is not fully harnessing the opportunities presented by GADP to grow into a thriving new car market,” said Biene.
“Only 6,000 new cars were sold in Ghana in 2023, which in my view, is not a true reflection of the potential of this country. I, therefore, hope that the Government of Ghana will soon do the right thing to implement the two outstanding elements to unlock the local market,” she added.
One of the major achievements of the Akufo-Addo government is the bringing in of these auto mobile companies to set up their assembly plants here in Ghana. It is, therefore, unfortunate that after investing millions of dollars into our economy, these companies have started crying over low sales.
But much as The Chronicle sympathises with their plight, we disagree with the suggestion that government should ban importation of second hand cars and vehicles in order to boost their domestic sales. The purchasing power of the majority of Ghanaians will simply not allow the implementation of such a policy.
Before these foreign auto companies were convinced to set up in Ghana, the policy makers should have first looked at the size of our economy to ascertain if the companies stand the chance of selling their final products domestically to recoup their investments. In an economy where majority of the people are below the poverty line, mass sales of brand new cars are certainly not going to be an easy task.
The Chronicle, therefore, suggests that instead of banning the importation of second hand cars and vehicles as these auto companies are suggesting, the government should give them tax incentives that will bring down the cost of the assembled cars in Ghana.
This, we believe, is the only solution to boost sales. Already, the government is raking in millions of dollars in the form of taxes imposed on these imported second hand cars and vehicles. Banning it will, therefore, lead to colossal loss of revenue to the state.
Alternatively, the government can also make it a policy to stop the importation of cars for the agencies, including the ministries, and instead buy from the domestic auto companies. We insist that the ban on importation of second hand cars, which are affordable to majority of Ghanaians, is not the answer to the current problem. The government must think outside the box on how to keep the auto companies in the country.
