Ghana has agreed to grant carmakers tax breaks for as long as 10 years if they open assembly plants in the country, Bloomberg News reports.
The deal should cinch plans announced earlier by Nissan and Volkswagen to launch production in the country. Bloomberg says Renault is studying a similar move and notes that Suzuki and Toyota announced plans in March to partner on vehicle assembly in Ghana.
VW pledged a year ago to erect an assembly plant in the country and open a training facility there for factory workers. VW said the scheme hinged upon Ghana adopting a supportive industrial policy that includes favoring government purchase of locally assembled vehicles.
In March, a report said Nissan expects to open an assembly plant in Ghana by 2022 with annual capacity to make as many as 60,000 vehicles.
Ghana’s trade minister says the country will offer 10-year tax breaks for companies that produce entire vehicles locally. Partial manufacturing operations will be able to apply for five-year tax breaks.
The minister also says Ghana will help promote the purchase of locally built vehicles by banning imported used cars that are more than 10 years old and hiking import duties on new and used vehicles to 35% from the current 5%-20%.
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Several years back, one of the authors visited a major North American assembly plant engaged in the launch of a new vehicle program. A "ramp-up" schedule was prominently displayed on a bulletin board deep in the heart of the plant. The schedule indicated that the day of the visit was the same day the plant was originally planned to achieve full capacity production of its new product. Yet the plant was actually producing only a few units an hour! The assembly plant's tardiness is certainly not uncommon, but did contribute to our interest in the wide range in vehicle launch performance across major vehicle firms.