UNIVERSAL MOTORS LTD. DEBUTS GHANA’S AUTOMOTIVE ASSEMBLING INDUSTRY
While the prospects of venturing into a wholly new environment can be a bit intimidating especially for an automobile company which is straddled with the arduous task of breaking grounds in a country like Ghana with its defined economic activities, Universal Motors Ltd. has for over fifteen years remained steadfast, committed, innovative and candid in its dealings with the Ghanaian citizenry. Standing tall above opposition and defiantly robust in the face of towering competition has been the signature of the brand and not being fazed and undaunted by any entrenched competition has been the incredible story of Universal Motors Ltd.
The Managing Director of Universal Motors Ltd., Mr. Subhi Accad, benignly revealed that, although the journey hasn’t been easy as the pervading competition “does not only come from the other authorized importers for the other manufacturers, but also, there was no consideration for the protection for local authorized importers”.
Taking cognizance of the protection of local importers, he maintains, the laxity inherent in the importation of cars into the country without proper regulations, where importers are at liberty to bring in their choice of cars without proper law or control at the customs, it is a concern. This, Mr. Accad further revealed, has been a constant bane to the company; although a glimmer of hope looms with government’s intervention.
“There’s no proper control in terms of whether the car is suitable to be driven, suitable for Ghana or the tropics. And gray importers or parallel importers, as we call them, bring in brand new cars with zero kilometers from countries who hold them as long-term stocks. And they bring them into the country at a cheaper price because they have been in stock for a very long time, specifically, the cars from the Middle East and some from the United States. So, those have been the main issues that we have been facing. Now, though, the solutions to these problems have started to arrive with the creation of government’s Automotive Policy”.
The ‘People’s Car’ Commitment to Clients
Strategically, Volkswagen has worked its way to the hearts of the people by living up to its pseudonym of being the ‘People’s Car’. For the automobile giant, what ingratiates them to clients goes beyond just affordability and quality to sublimely catering to the overall wellbeing of its clients and the environment.
“First of all, when we talk of the ‘People’s car’, it’s not just about the affordable price. But mostly, we do so also because of the safety features that it has on it. ‘People’s car’, first of all means, to protect the lives of the people, the health of the people, and as we move on, to adapt to the environment by building on the product so as to improve our environment. Definitely, we’re looking at many ways to keep the clientele loyal.”
In keeping the clients loyal to the end, the provision of “very high-quality car in comparison to its competitors, and to look at the issue of servicing” remains paramount. “For example, for most of the models that we’re offering, the servicing is done every 10,000km, with an inspection at 5000km where only partial payment is required, if at all”.
Aggression-Induced Marketing in COVID
Automotive companies and manufacturers have learned hard lessons about their businesses in the face of this pandemic. Although there are commonalities in how firms responded, not all responses have been equal, and some have certainly been more effective than others.
Despite being hit hard by the pandemic; Mr. Accad opines it has been “like any other manufacturer”. For instance, “we were ready to launch the assembled cars in March, however, the arrival of COVID-19 stalled activities until August when it was finally launched. All the investment and the SKD that arrived in the country had been sitting, waiting, ready to be assembled in the country. However, that delay, coupled with the economic situation related to the pandemic would definitely affect sales. But, we managed to do some sales due to the aggressive marketing and because of the thankful support of the Ghanaian clientele and the Ghanaian residents who want to support the locally assembled cars”.
Amiable Ghanaian Environment for Volkswagen
A conducive environment to productively operate is the pulsating need for any company to effectively thrive and rake in the needed profit and this is a lucky streak for Universal Motors Ltd. as it has palpably enjoyed such from the government of Ghana, particularly the Ministry of Trade and Industry.
“What is important in the Ghanaian market is that, the Ghanaian government has worked extraordinarily hard in collaboration with the ‘Triple A’ team of Africa and in collaboration with all the automotive manufacturers to implement an auto policy”. The automotive policy in the words of Mr. Accad “is considered one of the best auto policies in all of the African continent and having undergone careful studies, it has been properly organized, engineered and run mostly by the Ministry of Trade and Industry under Honorable Alan Kyeremanten, with all his team in a very professional way; in collaboration with the Ministry of Finance, Ministry of Transport, Ghana Standard Authorities, where they have started implementing homologation for the new cars that are being brought into Ghana”.
According to him, after the draft was finalized, it went a couple of times through parliament and cabinet for approval and then later on was passed by parliament.
“Coupled with the involvement of the authorities in Ghana, supported by the cabinet and the Parliament, in addition to all the support they had from the manufacturers and the professionals in the auto industry, have earmarked Ghana as the best country to implement the auto policy and hopefully, to be in a better position than other countries to implement the manufacturing.”
Also, aside the geographical position of Ghana, the blessing of being an English-speaking country flanked by Francophone countries and as well having the best democracies supported by a very good judicial system, “gives it a proper advantage against the rest. Definitely, Ghana under the umbrella of President Nana Akufo-Addo and the commitment of honorable Alan Kyeremanten to implement the African Continental Free Trade Agreement (AfCFTA) can, in the future, help us to expand the regional trade”.
Versatility in Car Models
Versatility speaks louder than the banality of business and as such the various models assembled at Universal Motors Ltd. includes the Polo hatchback, and the Tiguan which comes in two engines; the 1.4L and 2.0L. The 1.4L comes in trendline and the 2.0L, which is a four-motion automatic, comes in four grades: Trendline, Comfortline, Highline, and then the Highline premium. Among Volkswagen’s line is also the Passat which comes in three grades with one engine, 2.5L automatic. “Followed by that, we have the Teramont which comes in three grades. Then we have the Amarok; the manual transmission comes in two grades, that’s Trendline and the Comfortline, and the Highline comes in automatic transmission”.
Futuristically, Volkswagen is also hoping to implement in the first quarter of 2021 more models on stream which will be launched progressively. “We would have the All-space which is a longer Tiguan model. It comes in five seats with a much bigger boot space or with seven seats as well. So that would be launched early next year. At the same time, we are in discussions with Volkswagen head office, with Volkswagen South Africa, together with Universal Motors and we want to see how best we can implement entry models for saloon cars to suit our market so that we can have continuity in the supply of entry models for the cars”.
Bridging Price Gap
Luxury has always come at a steep price but the auto brand offers the Polo Hatchback, a manual transmission which comes at a very competitive price along with the Tiguan with competitive prices client don’t have to break a leg with its three years warranty respite. With this, Mr. Accad insists the prices of the cars have been “reduced considerably in comparison to the new ones of the past. When you want to compare that to the cars that are being brought in by the parallel importers or the gray importers from Dubai, from Oman, or from Saudi Arabia, or from the USA, Europe and all those countries, you’ll realize that those unauthorized importers don’t have a warranty on their vehicles”. Car parts like the engine and gearbox “are the major costly parts of the vehicle which falls under warranty” and as a result, it is important for clients to “think before deciding whether to buy a car from the gray or parallel importers” and if anything happens to the car, “whether it is from a very good brand, or a less quality brand, unforeseen issues can arise no matter the brand”.
According to Mr. Accad, any mistake or any challenge that may emerge with the car, without the warranty becomes egregious to the customer, as any means of salvaging it is “reduced now because of the implementation of the automated clearance at the ports of entry where people have to adapt to the proper model numbers for clearing the cars”. All hope isn’t lost for customers as government on its part via the auto policy is “planning and are still working to see the best way by which they can implement financing for the end users at a preferable interest rate”. For that to happen, it has to go through “banks and financial institutions as this is their job and our job is to sell the cars and maintain them through after-sales”.
The Competitive Edge
Being a leader comes with hard work and when it comes to keeping a competitive advantage, Volkswagen is prepared to go the extra mile. However, in rising above other assembly plants coming into the country, Mr. Accad admitted to the many issues that “we have to look at”. That notwithstanding, he reveals that their swift response to the announcement of the automotive industry initiative in Ghana by liaising with “Volkswagen immediately” makes them the first to “be responsive to that initiative of the government”.
“They had signed the MoU in the presence of Chancellor Angela Merkel and the Vice President, H.E Mahamudu Bawumia between the former CEO of Volkswagen South Africa, Mr. Thomas Schafer, and Honorable Alan Kyeremanten. So, we have the advantage by being the first one to start the assembly and at this stage, all the cars we’re assembling have gone through homologation and approval”.
While conceding to the open space for competition, he opines that they are expecting part of the auto policy which will ensure used cars coming in into the country; however, government’s desire is the entry of “only good used cars” and “not the used cars which are damaged or the used cars that have been flooded, and definitely, they have to go through the homologation”.
Undoubtedly there will be competition, but the focus of Volkswagen is to “support and promote the used car industry by encouraging the used car dealers”. Instead of going to elsewhere to buy cars which may not be suitable for Ghana in terms of “everything related to the requirements for the cars to be used here, they should instead use the locally manufactured cars or the authorized imported cars by the manufacturers where those cars are made for our market, they’re built for our roads”. Mr. Accad indicates that, this will make the auto policy “a win-win situation for the assemblers, for the authorized importers as well as the used-car dealers”.
Collaborations with Local Importers
Local importers can definitely heave a sigh of relief as the Universal Motors Ltd. MD has shown magnanimity by stating “they would still play a major role in the used car vehicle market”. He, however, expressed worry that some of the cars imported “are made for right hand driving countries and they’re transformed into left-hand drive which is not safe at all on our roads”. Volkswagen is hopeful of a collaboration with car dealers in a few years where “the used car dealers can play a role by buying used cars that are assembled here”. A move Mr. Accad believes will curb the issue of stolen cars penetrating the country as some “have no history at all. So at least we’d know that those used cars here have got the history behind them, from the time it was imported; if it is fully built car or through the authorized manufacturers or if they have been assembled here and they would enjoy the same advantages that the authorized assemblers have as well. So, it’s a mutual advantage”.
Volkswagen’s Future for Automotive Industry in Ghana
Having mid-to-long term plans are the guiding principles for any organization to transition from one phase to the other and Volkswagen setting up its office here as Universal Motors Ltd., and with the subsequent appointment of Universal Motors Limited as the licensed manufacturer, spearheaded the first phase of its plans. Premised on this, Mr. Accad maintains that based on the thorough and proper implementation of the auto policy, they would go into the second phase where they would transition from “SKD (Semi Knocked- Down) eventually to enhanced SKD or MKD (Medium Knocked- Down)”. Also, considering the ambitions of other spare parts manufacturers, Volkswagen anticipates a situation where there will be equal opportunities for “spare parts manufacturers to come into the country and start local manufacturing for spare parts”.
“That would boost the industry here as well to have more local content and that opens the door for the CKD (Complete Knocked- Down). But of course, we have to understand one thing which is very important. The normal SKD normally depends on the volume of the cars. So, maybe the SKD can be used from 5,000 up to 10,000 cars. Anything above that, we can go into enhanced SKD. But then, it has to go through a very high-volume requirement. And then, when we go to the CKD, we have to take into consideration that there would be more limited line of models assembled here and under the CKD, SKD can continue or the FBU (Fully Built Unit) can continue. So, the idea is to grow with Ghana and to move forward with Ghana as we grow and with that growth, the idea is to invite many stakeholders in the car industry, whether they become dealers or very well-trained workshops to participate in the business”.