Ghana’s nascent automobile assembly sector faces shutdown after the 2026 national budget stripped away a 20 percent Value Added Tax (VAT) exemption that had made local vehicle assembly commercially viable, with global automotive brands already halting orders for assembly kits.
The Automobile Assemblers Association of Ghana (AAAG), which represents nine registered vehicle assemblers, issued the warning after months of fruitless engagement with authorities. The group says the VAT exemption removal, contained in Finance Minister Cassiel Ato Forson’s 2026 budget, has eliminated the 25 to 30 percent cost advantage that had kept local assembly plants competitive against imported fully built vehicles.
AAAG President Jeffrey Oppong Peprah, who also serves as Chief Executive Officer of Volkswagen Ghana and Vice President of the African Association of Automotive Manufacturers (AAAM), put the sector’s position directly to President John Dramani Mahama during a Presidential Dialogue on February 23, 2026. The irony of the moment was not lost on industry players: the same president who convened the dialogue to discuss positioning Ghana as a regional production hub under the African Continental Free Trade Area (AfCFTA) framework was hearing from an industry being dismantled by his government’s own fiscal policy.
“Local assemblers are now on their knees. Once current stock is depleted, operations will cease, leading to inevitable job losses,” said AAAG Vice President Salem Kalmoni, who also serves as Managing Director of Japan Motors Trading Company.
The stakes are measurable. AAAG member companies have collectively invested nearly €80 million in assembly facilities, equipment and workforce development. Japan Motors alone assembled approximately 1,400 vehicles in 2025 and had active expansion plans before the policy shift. At risk are more than 400 skilled engineering jobs and seven assembly plants, including facilities operated by Toyota Tsusho Manufacturing Ghana, Silver Star Auto, Rana Motors Ghana, Hyundai Motors and Investments Ghana, Honda Manufacturing Ghana, Zonda Tec Ghana and Kantanka Automobile.
The Ghana Automotive Development Policy (GADP), introduced around 2021 and approved by Parliament, was built on three pillars: duty waivers for Semi Knocked Down (SKD) vehicles, tariffs of up to 35 percent on Completely Built-Up (CBU) imported vehicles, and a ban on vehicles older than ten years. When implementation stumbled, the government introduced the VAT exemption and additional duty waivers as a bridge mechanism. Those substitutes have now been removed while the original GADP protective tariffs remain unimplemented.
The AAAG is asking the Ministry of Finance, through the Ministry of Trade, Agribusiness and Industry, to either restore the VAT exemption or enforce the GADP’s original 35 percent flat duty on imported fully built vehicles. Without one or the other, assemblers say the sector cannot survive long enough to scale up to the point where it no longer needs support.
