Govt eyes automobile industry to transform economy

Government, as part of its transformational agenda for the automobile industry, has identified Vehicle Assembly and Automotive Components Manufacturing as a strategic anchor industry to accelerate the country’s industrial development.

Given the complexity of the pandemic, there is reason to believe that the recovery phase for COVID-19 and the automobile sector will require unprecedented levels of transposition.

The automotive industry has been boosted by giant names like Toyota, Volkswagen, Suzuki, SinoTruck, Renault and Nissan which have been equipped and started assembling here for the local market – in a country where older vehicles make up 75% of the total number of vehicles on our roads, irrespective of having Kantanka vehicles assembled in the country.

The emerging technologies of an automobile have changed the face of the automobile sector across the globe. Therefore, the application of technological advancements plays a very significant role in designing and production of cars.

Global auto majors like VW and Toyota have been waking up to Africa’s potential for years, but the continent’s small and fragmented markets and political uncertainties have discouraged them from committing huge investments in local production and assembly; hence, post-COVID is the time to look out for.

Government has imposed restrictions on used cars and offered tax incentives for global carmakers to encourage them to set up local plants. But experts say increased tariffs on second-hand cars will not make new cars any more affordable – especially in the absence of auto loans, let alone cheap ones released into the market.

Also, having unstable increments in fuel, having poor fuel quality, lack of enough vehicle financing schemes and car importers looking forward to having a strategy to be given a reviewed chance of importing some vehicles into the country has played a major role in some challenges to playing in the automobile sector.

New car ownership remains rare across Africa, where in most countries eight out of 10 vehicles are second-hand cars.

Considering Ghana, Nigeria, Rwanda and Kenya, global carmakers are investing in assembly plants — often described as screwdriver plants because of the low manufacturing value addition that takes place in them — instead of full-fledged production units.

Carmakers have so far directed the bulk of their investments to South Africa and Morocco, the biggest auto manufacturing hubs by some distance in Africa. While the two countries mainly make cars for foreign markets, they also have big domestic markets; making long-term commitments there worthwhile.

As a result of this positive signal, Ghana has attracted investments in vehicle assembling from leading Original Equipment Manufacturers (OEMs) and investment partners, with positive projections of spill-overs into local automobile manufacturing.

Automobile industry has been the backbone of manufacturing sector in any country.

In August last year, just when the global auto industry was beginning to rise in recovery – following the worst carnage caused by the novel coronavirus, German carmaker Volkswagen unveiled its first vehicle assembled in Ghana, a Tiguan SUV, in the presence of President Nana Addo Dankwa Akufo-Addo.

The event marked the official opening of VW’s first vehicle assembly facility in the West African country and the fifth in sub-Saharan Africa.

“Although the African automotive market is comparatively small today, the sub-Saharan region has the potential to become an automotive growth market of the future,” Volkswagen said in a statement.

Africa has been touted as the final frontier for the global auto industry, which is eager to get the continent’s fast-growing middle class to buy its vehicles amid rapid urbanisation as demand falters in traditional European and US markets.

The customer’s needs are changing proportionally with the changing technological trends in the automobile industry.

There are currently 45 vehicles for every thousand inhabitants in Africa against a global average of 203, with the continent’s more than a billion people – or 17% of the world’s population – accounting for just a little over 1% of cars sold worldwide.

Automobile industry has been the backbone of manufacturing sector in any country. During the past decade, passenger car industry has emerged as one of the growing sectors in Ghana’s economy. Technological features in the passenger cars industry have been evolving in the global market, and customers have been the most important stakeholders to judge the requirement of these features of newly made cars.