Toyota, VW entry to disrupt used cars market

The planned establishment of vehicle assembly plants in Ghana by international automobile brands Volkswagen (VW), Nissan, Toyota, Renault and Sinotruck, has forced a policy rethink on used cars import by the Ghanaian government.

With no significant car assembling plants, used and salvaged automobiles are the single highest imports of the country. Top five (5) import goods in descending order are vehicles, machinery, electronics, cereals and plastics.

Average annual import of vehicles since 2018 has averaged US$1.85billion—of which used vehicles (5-10 years old)—constitute about 70 percent. Minister of Parliamentary Affairs who is also the Majority Leader in the 275-member legislature, Osei Kyei Mensah Bonsu, announced government’s intention to ban the importation of used cars which are 10 years old and above, as a prerequisite to ensure the entry of VW, Nissan, Toyota, Renault and Sinotruck.
Business24 sources say, despite the initial firm interest shown by the named automobile companies in establishing assembling plants in the country, the stark statistics of imported used cars made them request for action to be taken as a pre-requisite to their entry in order to ensure there is market for their products ahead of their scheduled production date. Currently, importers of used cars, which are 10 years and above are made to pay a fine in addition to the duties on the car as determined by the Ghana Revenue Authority (GRA)—Customs Division– computation. The Customs Amendment Bill, 2019 is, therefore, expected to be considered in this current meeting of Parliament before it rises early March.

Mr. Kyei-Mensah-Bonsu, speaking to the press in Accra on Friday said: “You would know that thanks to the economic environment that we have now, and of course the political stability that we have in the country, the sojourning of the President is yielding positive dividends in the sense that there are many auto-manufacturing companies that now want to come and begin assembling automobile in the country.”
“Volkswagen (VW) has given indication; Nissan has also done same, Toyota and Sinotruck as well as Renault. Now if they want to come we need to clean up the environment, you cannot have them to come and begin production of vehicles when you allow unfettered importation of second-hand vehicles.It doesn’t occur anywhere, so you have to regulate the importation of second-hand vehicles.
“For a start, maybe we may begin by banning the importation of vehicles that are older than 10 years and then also prevent the import of salvaged vehicles (accident cars),” the Majority Leader added.
Auto companies deepening footprint in Africa.

Toyota, the Japanese car maker which also has a stake in Suzuki, is part of the top 10 corporate brands in the world with a brand value of over US$35.3 billion.

The car maker will be deepening its footprint in Africa by establishing an assembly plant in Ghana. It already has presence in North Africa (Egypt), East Africa (Kenya), and South Africa.

Its African expansion strategy and heavy investment in assembly plants on the continent show the potential the continent holds.
The Chief Operations Officer of the company in charge of the Africa division of Toyota Tsusho, Mr. Imai Toshimitsu, notes that: “The products to be assembled in Ghana include the Toyota Hilux pickup, which is already popular in Ghana. Since it will be locally produced, I hope it will be more popular. We are also planning to introduce small passenger cars, with two Suzuki brands,” the Toyota COO explained.
Colin Coleman, a former CEO for Goldman Sachs in Sub-Saharan Africa, notes that: “Africa has the potential to go much further. The world’s youngest and fastest-urbanizing continent, Africa will have 24 million more people, on average, living in its cities each year between 2015 and 2045 – more than India and China combined – according to a 2016 McKinsey & Company estimate.

“This implies major increases in consumption. Already, spending by consumers and businesses in Africa totals US$4 trillion. Household consumption is expected to grow by 3.8% annually until 2025, reaching US$2.1 trillion, and business spending should grow from US$2.6 trillion in 2015 to US$3.5 trillion in 2025. Altogether, the McKinsey report predicts US$5.6 trillion in African business opportunities by 2025.”

Source: Dominick Andoh & Eugene Davis || thebusiness24online.com