The aftermath of COVID-19 has brought the biggest crisis to the automotive industry since World War II. Numerous manufacturers closed their plants, leaving the demand for new cars on the high. More so, the pandemic’s impact involves a reassessment of existing automotive policies, especially in Sub-Saharan Africa. So which ways exactly has COVID-19 impacted the automotive industry? Let’s find out.
1. Policy Changes and Economic Revival
The negative impact of COVID-19 has caused a desperate attempt for economic revival in many countries worldwide. Many African countries have adopted new car manufacturing policies. Although the African continent is one of the largest importers of used cars from the United States, Germany, the UK, and Japan, car vendors’ ability to import second-hand cars and spare parts are now in jeopardy. As borders of many nations are closed, governments are reevaluating how to keep business in their countries, not farm it out.
So what does this mean for second-hand car sales in the region? Well,used cars for sale in Ghana, for example, are still available. However, although second-hand cars make up about 70 percent of all vehicle imports in countries like Ghana, this number is set to plummet due to the governments’ partial ban on second-hand car imports. The most impacted of these second-hand car brands include Toyota, as well as a range of other brands from Japan and the United States.
More so, since Ghana operates an automotive ecosystem where imported used cars make up about 70% of all imported vehicles, the government could lose millions of dollars within the first three years after implementation. Why? Second-hand car dealers and auctions offer a far more affordable means to purchase a vehicle in a country where car loans are rare.
In addition to not importing cars older than ten years, the bill also included banning vehicles involved in an accident at any time. So, what does this mean for car buyers? If they still want to purchase second-hand cars, only models of good and safe quality are available.
2. Advancement in the Automotive Sector
Another significant way COVID-19 has impacted the automotive industry is by offering many governments the opportunity to create a more thriving automotive ecosystem. The government’s measures have forced car manufacturing giants like Volkswagon and Nissan to begin assembling vehicles in the country.
Volkswagen, a leading car manufacturer that needs no introduction, will now have to assemble its vehicles through Universal Motors Ltd, a local Ghanian associate. These new changes may spell new beginnings for the automotive sector in Ghana. So what does this mean, and why is it important? To put it simply these new policies will create more good-paying jobs for African engineers, insurance companies, dealerships, etc.
The creation of these new jobs means that overall the standard of living in these countries could increase. Despite the global pandemic, the growth in sales of new vehicles in Sub-Saharan African countries like Ghana will likely increase from 100,000 vehicles to about two million a year in just 15 years.
3. The focus on Continent-Based Manufacturers
Since the implementation of policies limiting the importation of used cars, African car manufacturers, such as Innoson, can now sell more new vehicles on the continent. The company, which sells over 10,000 vehicles a year, could see a surge in sales as these policies implemented are causing a scarcity of second-hand cars. The Nigerian car manufacturing industry saw a significant investment of $1 billion last year. These statistics already indicate that there are investors who believe in the African auto industry.
The impact of COVID-19 has resulted in the formation of newly drafted economic revival plans for many governments worldwide. The automotive industry is no exception in terms of these newly formed policies. In the case of many Sub-Saharan African countries, the ban in the importation of used cars older than ten years will ensure that the recognition of continent-based manufacturers in increased.