Volkswagen has opened a vehicle assembly facility in Ghana as the West African country seeks to attract auto manufacturers and turn itself into a car-making hub.
The plant, based in Accra, has the capacity to assembly 5,000 units annually and will make Tiguan, Teramont, Passat, Polo and Amarok models.
The German carmaker announced it is initially assembling the vehicles through a local partner, Universal Motors. Accra has become the fifth of Volkwagen’s plants in Sub-Saharan Africa besides South Africa, Kenya, Nigeria and Rwanda.
The move comes as Ghana partially banned importing used cars in a bid to stimulate the interest of carmakers in setting up production facilities in the country.
Ghana has implemented policy measures that aim to turn the country into a West African car making hub by providing incentives for automotive manufacturers and assemblers registered under the Ghana Automotive Development Programme (GADP).
As part of this package of measures, it has banned the importation of salvaged vehicles as well as specified motor vehicles over 10 years of age.
It also plans to increase import duty on specific motor vehicles to stimulate the market for new vehicles. Currently used cars make up about 70% of the market in Ghana.
The government launched the GADP last year to promote the manufacture of automobiles for both domestic market and the West Africa sub-region to enable manufacturers and assemblers to attain critical volumes to make their investments worthwhile.
Nissan, Toyota, Suzuki and Renault are among automakers weighing setting up local assembly of vehicles in Ghana.
Volkswagen said: “GADP has paved the way for Volkswagen to solidify its commitment in Ghana with the initial investment for the first phase of its long term vehicle assembly plans. Volkswagen thereby is committed to helping Ghana to develop a modern automotive industry as part of the country’s industrial transformation agenda.”
“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.”