Market Trends of Ghana Automobile Industry
Passenger Car Segment to Hold Majority of the Market Share
Passenger cars account for the majority of the share by vehicle type, owing to the aggressive government strategies to enhance and improve domestic car manufacturing facilities. Rising investments by automakers to expand their vehicle assembly plant also contribute to the growth of the segment.
Used passenger cars dominate the Ghanaian passenger car segment, owing to their affordability compared to their counterparts. Most of the used cars in Ghana are imported from Japan, Germany, and the United States.
Hence, to develop the domestic automotive manufacturing capability and subsequent expansion of the new car market, the Ghanaian government is taking active initiatives to attract investment in the automotive sector. In recent years, multiple international automakers have announced significant investments in the country to develop vehicle assembly plants. For example,
- In June 2023, Kia Corporation’s official distributor in Ghana “Rana Motors” launched its state-of-the-art assembly plant in the country. This marked a major milestone in the company's expansion strategy in the African continent. Focused on Western Africa, this strategic move positions Kia as a key player in the region's automotive industry.
- In March 2023, the Caretaker Minister of Trade and Industry inaugurated a vehicle assembly plant of the German automaker Volkswagen at the Free Zones Enclave in Tema. The company invested USD 8 million for the construction of this plant to integrate the lucrative opportunity that the Ghanaian automotive market presents.
The Ghanaian government is also planning to implement initiatives to reform the automotive sector under the Electric Vehicle Policy Plan. One of the major strategies that the government is planning to implement is to ban the import of petrol and diesel cars in the country by 2024. This move is to assist the growth of the electric passenger car market. Owing to the above-mentioned factors, the passenger car segment in Ghana is expected to witness a rapid surge during the forecast period.
Electric Vehicle Propulsion Witness Fastest Growth Rate
Ghana has identified transportation as one of its key areas for adaptation and resilience, aiming to decrease emissions by 64 million metric tons of CO2 equivalent (MtCO2e) by 2030. In 2016, road transportation alone accounted for 11.11% of Ghana's overall CO2 emissions, and since 2000, it has contributed to 59.9% of the cumulative carbon emissions, according to the Ghana Environmental Protection Agency.
Increasing the government’s effort to promote the adoption of electric vehicles and expanding the electric vehicles export market are major determinants for the demand for electric vehicles in the country. Constructive government policies are expected to positively impact the demand in the target market during the forecast period.
The 2024 Budget Speech delivered by Ghana's Minister for Finance and Economic Planning in November 2023 included notable incentives to promote electric vehicles. Specifically, the following tax reliefs were prioritized for implementation:
- Import duties on electric vehicles used for public transportation will be waived for a duration of 8 years.
- Import duties on semi-knocked down and completely knocked down electric vehicles imported by registered EV assembly companies in Ghana will be waived for a period of 8 years.
- The zero rate of value-added tax (VAT) on locally assembled vehicles will be extended for an additional two years.
In recent years, the Ghanaian government has been actively focusing on improving the country's electric vehicle charging infrastructure. The Electricity Company of Ghana (ECG) signed an agreement with a local Ghanaian company to install a total of 200 chargers across Southern Ghana in the first phase of the project.
- In June 2023, the Vice-President of Ghana disclosed that a Ghana-based company will be commencing the operation of its electric vehicle assembly plant in Ghana starting in 2024.
Owing to the above-mentioned factors, the electric vehicle segment of the market is expected to showcase rapid growth during the forecast period.
