Cost of vehicles projected to reduce as Cedi gains against US dollar

Some car dealers are optimistic that vehicle prices could drop in the coming months if the Cedi continues to strengthen against the U.S. dollar.

They believe that the recent gains made by the local currency may ease the cost burden for consumers, particularly those looking to purchase second-hand vehicles.

Ghana’s automotive market is dominated by imported used cars, mainly from Europe and North America.

The prices of these vehicles on the local market are significantly impacted by two key factors which are the exchange rate and port-related import duties. For years, a weakening cedi has led to higher costs for both importers and buyers.

According to vehicle dealers, current retail prices remain high because the cars were imported when the exchange rate was less favourable.

However, with the cedi making notable gains in recent weeks, they expect that future imports will be more affordable, leading to a potential drop in prices.

Dealers tell Citi Business News that the is already growing pressure from customers who are demanding price reductions in line with the cedi’s appreciation.

“When the dollar reduces, every commodity in the market reduces. We have something in economics called consumer behavior. The consumers when they come to the market and when they see that when I went to Achimota and they see that this person was selling this particular car GH?20,000 so when I come here why are you saying GH?100,000? When I go to Circle, another person is selling maybe at GH?150,000….I should rather go to where I got it GH?20,000.

“The consumer behavior will tell us and determine how far we should go. What is happening now, everybody in the system is aware the dollar is coming down so when people are even asking, they say now that the dollar is coming down why don’t you guys also reduce [prices of] your car for us to get one.

“That is the situation we are facing. I think that from now onwards if the dollar is able to sustain even at where it is now everybody will be happy that in a month or two, the prices of cars will come down,” General Secretary of Second Hand Car Dealers Association, Clifford Ansu told Citi Business News in an interview.

He also added that the sale of vehicles varies widely. While some vehicles are sold within a month or two after arriving in Ghana, others may sit in garages for up to a year before being purchased. This makes it difficult to immediately reflect exchange rate movements in current prices, but they are hopeful that the impact will become more evident in the months ahead.

“If the dollar at the time was GH?17 and today the dollar now is GH?12, look at the difference. When someone brings in their cars either today, tomorrow or next month and they come to face this [exchange rate] situation, they will definitely reduce theirs,” Clifford Ansu stated.

Meanwhile, industry stakeholders are also renewing calls for a review of the current import duty regime. They argue that such a move, combined with a strong currency, could help create a more favourable pricing environment for car buyers across the country.

“We want the government to peg the dollar at the ports like six months to a year so that the importer will be sure. We are praying this is not a nine day wonder. The dollar must remain stable,” another car dealer Alexander Osei Assibey said.