Japanese automotive manufactures Mitsubishi, Suzuki to set up assembly plants in Ghana

GHANA – Japanese multinational automotive manufacturers Mitsubishi and Suzuki have announced plans to establish car assembly plants in Ghana, CFAO Motors Ghana – the local distributor of the two vehicle brands – has said.

The move by the Japanese car manufactures follows the establishment of a car assembly plant by German car manufacturing giant Volkswagen.

The Volkswagen car assembly plant with an installed capacity to assembly 5, 000 units per annum was inaugurated last month by Ghana’s president H.E Nana Akufo-Addo.

CFAO Managing Director Paulo Fernandes in an interview with Business24 said that the company was working with the two car manufacturers and “obviously by the start of 2021 we will be present as an assembly plant [in the local market] also.”

 “To have an assembly plant in Ghana is a huge opportunity for global car manufacturers to produce new vehicles at cheaper prices for the population—and I think it’s a really good idea,” Mr. Fernandes added.

To him, the move affirms the confidence of the two carmakers and CFAO in Ghana’s domestic automobile industry.

Compared to other markets, Ghana’s new car market is relatively small and currently accounts for 30% of the total car purchases in the country.

He remaining 70% is comprised of used cars, 90% of which salvaged cars sourced primarily from the United States and the United Kingdom.

“If the government will support us—like placing a ban on used-car imports—the new car market will grow and it will be good for everyone. It is dangerous for the growing nation to continue to purchase vehicles that are not fit to be driven in Ghana.”

Paulo Fernandes- CFAO Managing Director

According to Globenewswire most of the used cars arriving in Ghana have obsolete technology whose carbon dioxide emissions (CO2) and fuel consumption might no longer be compliant with the manufacturer’s standards imposed in developed countries, and therefore, is a threat to Ghana’s environment.

The harmful impact of used cars on the environment and its threat on Ghana’s nascent new car industry prompted the administration of President Akufo-Addo to formulate a legislation to minimize their proliferation in the country.

The legislation which was finally passed two months ago prohibits the importation of any vehicle that has a history of accident into the country as from October this year.

This stimulated interest from a number of global car manufacturers seeking to fill the gap to be left by the banning of salvaged cars in the country.

The law was however shelved early this month by Ghana following resistance from used-cars automotive dealers in Ghana who argued that the law would deny them of their daily livelihoods and render them jobless.

Apart from Volkwagen, a number of other global car manufacturers Nissan, Toyota Motor Corp, and Renault SA have announced plans to set up assembly factories in the West African country.

For such investments to succeed, however, the CFAO Motors boss reiterated the need for a ban on used and salvaged vehicles, which, he argued, was “a good thing for the environment and for the future of the country”.

Apart from government support, Mr. Fernandes said the local automobile industry will need support from the banks, in terms of providing secure and sustainable means of funding for potential car buyers.

Liked this article? Subscribe to DealStreet Africa News, our regular email newsletter with the latest news, deals and insights from Africa’s business, economy and more. SUBSCRIBE HERE

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.