Listen to the article:
Tuesday saw the commissioning of a Kia car assembly factory in Ghana by President Nana Addo Dankwa Akufo-Addo, who urged the automaker to make its goods more affordable for local consumers.
The plant, located at Amasaman near Accra and built by Rana Motors Limited, a local licensed dealer for the South Korean automaker, will assemble multiple Kia brands for Ghana and the West African markets.
At a ceremony, President Akufo declared that the plant’s opening had given Ghana’s plans for industrial transformation a significant boost.
He said that the change will help his government realize its goal of turning the nation into a competitive manufacturing center for West Africa’s automobile industry.
The President stated that the government’s deliberate effort to promote investment in the automobile industry through the Ghana Automobile Development Policy had made it possible to create the facility.
Background
In a bid to make Ghana the regional hub for car assembly and boost car sales in the local and regional markets, the government of Ghana is offering 10-year tax breaks to the automotive manufacturing industry — a move that has attracted some of the world’s foremost manufacturers.
According to an Africa Business Pages report, Toyota, for instance, is aiming to collect 30% of the corporation’s total annual revenue, currently at $60 billion, from Africa in the coming 20 years. Industry experts forecast that Africa will account for one-third of the world’s population by 2050, up from 17% now.
Market
Africa currently accounts for less than 1% of global annual new car sales but in Ghana, industry experts predict that new vehicle registrations are expected to expand at an average annual rate of just 1.5% from 2019-28.
According to the Ghana Automobile Dealers Association, only about 10,000 new cars are sold in Ghana annually. This is due to several factors, including the high cost of new cars, limited access to financing, and the prevalence of used cars.
However, there is potential for growth in the market for new cars in Ghana. The government’s efforts to promote the local automotive industry, such as the establishment of the Kia Assembly Plant, could encourage more international carmakers to invest in the country. In addition, the increasing middle class and the growth of the economy could also lead to an increase in demand for new cars.
It is worth noting that the market for used cars is much larger in Ghana, with an estimated 90,000 used cars imported annually. This is because used cars are more affordable and accessible for most Ghanaians. However, the government’s efforts to promote the local automotive industry could potentially shift the demand toward new cars in the future.
