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Business News of Monday, 6 November 2017

Source: Starrfmonline.com

Place huge tax on used cars – Automobile firms

Some players in Ghana’s automobile space are pushing for stricter regulation on the importation of used cars into the West African country.

According to them, the development possess a risk to the economy as many of them are not country compliant.

Per statistics from the Ghana Ports and Harbors Authority; in 2014, 73,579 vehicles where imported into Ghana via the Tema Port. In 2015, the number reduced to 70,193. Last year the number rose to 91,213.

About 80 percent of the vehicles where used cars ranging between two and nine years. But automobile firms want government to check the development.

According to them, many of these vehicles are not fit for tropical condition. Executive Director of Toyota Ghana Dr. Eric Dako told Starr Business’ Osei Owusu Amankwaah that, “we are in the tropical zone and our temperatures are always very high and then we have cars that are for temperate regions that are brought into the country. What happens is that these cars are not meant for Ghana so you either have problems or you buy a car you will never use.”

CEO of Premium Motors, Jihad Hijaz concurs. “We need to critically look at this grey market situation, where people actually just sit in a plane, go somewhere and buy 20, 30 or 40 vehicles, come here and start to sell it. Those might not be compliant vernicles; those might be vernicles designed for different regions of the world.”

Comparatively, it is cheaper importing a car and paying the required duties, than to acquire a brand new one here in Ghana. But Public Relations executive, Douglas Agyeman who imported a Benz car in 2015 has been facing several challenges. He told Starr Business that a diagnoses of the challenges reveled that it was not meant for the tropical weather.

“After a month of using the car, I realized it had some mechanical and electrical problem. I took it to the shop and at first they could not identify the problem; they will solve this and I move it out then it comes with another. Then finally I got hold of someone outside the country; I told him of the challenges and he told me the car was not meant for the tropics but for conditions in Europe and parts of America but not Africa,” Agyeman said.

For many like Douglas, the main reason for importing was to save cost but they are rather spending more. He had spent about GHC 42,000 on repair works; just about the amount he paid as duty for the car.

But his case may be peculiar as a Communication consultant, Sena Damilola, holds a different view. For him the economy favors the importation of used cars. He has had a smooth journey so far with his Toyota Corolla.

“Suspension, under the vehicle … everything is OK. People use Lamborghinis in Ghana, people use Bugattis in Ghana. It depends on where you are buying your fuels from, there are multinational companies that have good fuel,” Sena said.



But Toyota Ghana’s Dr. Eric Dako insists that fuel quality varies and plays a critical role in ensuring the longevity and proper functioning of a car.

“What we want to clarify is that, the fuel quality of the US market and other markets is completely different from the fuel characteristics in Ghana”.

He added there are some challenges that can be fixed easily there while others will stay forever. “So for instance, frankly, if you brought in snow tyres we will remove the snow tyre; if for instance you have pre heaters we will remove it. But all these things are adding up unnecessary cost. But if it is fuel incompatibility then it adds up so much cost because every now and then you are going to the workshop to get your car fixed.”

Currently, government placed a penalty tax on vehicles above 10 years. This has resulted in many people importing cars which are between seven to nine years old. These cars are a bit cheaper in Europe and America. Taxes on them are also moderate. The intention of the penalty is to ensure the importation of environmentally friendlier Vehicles.

Shipping consultant Dr. Kofi Mbiah believes government’s intention will be better served if it reduces taxes on lesser aged vernicles which are not brand new.

“When we are looking at used vehicles we could start from say two years old and reduce the duties with respect with the newer vehicles so that as you go forward as in terms of the age of the vehicles then you will be paying more; so that it will be encouraging people to bring in newer vehicles,” Mbiah suggested.

All over the world the used car market seems to gain more attention than that of brand new cars. But they all come with their benefits and challenges. It is clear one outweighs the other.

So, will you save to buy a brand new car in Ghana or you will import; the ball is in your court.