With some of the world’s automotive giants setting up assembly plants in Ghana, the country is fast emerging as a hub for innovation, economic growth, and a new era in transportation. This transformation is undoubtedly positioning Ghana as a leader in automotive development within the sub-region and the rest of Africa.

Ghana’s automotive sector has traditionally been dominated by retailers of imported used vehicles, with only a few distributors handling new car sales. However, the landscape is gradually shifting with the implementation of the Ghana Automotive Development Program (GADP), which has attracted major global automakers. Currently, six automobile assemblers are registered under the GADP: Volkswagen, Toyota, Rana Motors, Sinotruck, Japan Motors, and Kantanka.

Volkswagen Ghana made history in August 2020 as the first automotive company to register under the GADP. Having assembled vehicles locally for the past five years, Volkswagen Ghana is now working closely with the government and key private sector players to introduce a vehicle financing facility aimed at making new cars more affordable for Ghanaian consumers.

Jeffrey Oppong Peprah, Managing Director of Volkswagen Ghana, noted the challenge of vehicle affordability in Ghana, where the majority of cars are purchased outright with cash. Unlike in developed markets where financing schemes enable consumers to spread payments over time, Ghanaian buyers often save for long periods to afford vehicles, which has led to a high demand for used cars.

Recognizing this challenge, Volkswagen Ghana is engaging stakeholders, including banks, insurance companies, and the Automobile Association, to create an incentivized loan system with lower interest rates tailored for vehicle purchases. Currently, commercial loan interest rates exceed 24%, making car financing inaccessible to many Ghanaians.

“We are engaging the government to see how we can implement a financing model with reduced interest rates, significantly lower than the prevailing market rates, to make new vehicles more accessible,” Oppong Peprah stated. “If we can develop a structure where consumers have the opportunity to spread payments over time, it will not only increase demand but also reduce the reliance on imported used cars.”

Volkswagen’s local assembly operations have already contributed to cost reductions, with import taxes waived for assembled units, leading to a price drop of over 30% compared to fully imported vehicles. If coupled with an efficient financing scheme, locally assembled cars could become even more affordable, eventually competing with used vehicles in terms of price.

The initiative aligns with Ghana’s broader automotive development agenda, which seeks to encourage local vehicle assembly and reduce the country’s dependence on second-hand imports. By making financing more accessible, Volkswagen Ghana hopes to boost new vehicle sales while ensuring that consumers have access to reliable and warranty-backed automobiles.

Automobile industry analyst Raju Parwani told The High Street Journal that the success of the proposed financing model could transform Ghana’s automotive industry, creating a sustainable ecosystem that benefits both consumers and industry players.

He noted that increased sales of locally assembled vehicles could help curb the importation of used cars, which often have less efficient engines and outdated emission control technologies.

“Many imported used vehicles have higher carbon dioxide emissions compared to newer models due to their aged combustion systems,” he explained.

Parwani also praised initiatives where institutions facilitate vehicle acquisition for their staff directly from manufacturers, describing such arrangements as forward-looking and beneficial to both employees and the industry.