Why Ghana’s grey car market is prevailingly popular

All over the world, businesses strive to shore up their gains in a competitive global market.

To reduce the cost of production, and for survival, they resort to cutting corners and indulge in all kinds of obnoxious practices. You will find sales of goods being initiated through the application of wrong methods and values for the sole purpose of maximizing profit. This approach is where grey markets originate from, but it comes with loads of problems for nations and people, especially for the end users.

The menace of grey markets is deeply prevalent in Africa, especially in the west African sub-region where the economy is largely consumer driven.

Moreover, many of our importers who are bent on maximizing profits in a poor economy may not be aware of the adverse implications of grey markets on both human and material resources in the long run.

It is the combination of these factors that have led to the presence of the grey market which has become the bane of the auto business in the sub-region, as many vehicles not meant for our environment are being imported.



Source: Ghana Automobile Distributors Association

Fauster Abasa-Addo, an auto sales & engineering expert, said: “as technology changes rapidly, customers who are not recorded in the manufacturer’s database will not avail themselves of the opportunity to gain from the latest technologies in the auto industry with regards to repairs and maintenance. In case of any manufacturing defect, their vehicles may not be recalled for prompt and proper maintenance”.

He further narrated some challenges faced by the users. “There are instances where radiators are found to be too small, thereby increasing the incidence of overheating, especially in the afternoons. He advised that it is better to buy from the original source so that customers have their desired peace of mind”.

There is no gain-saying in the fact that in Ghana for example, almost all automobile brand builders are grappling with this grey market problem which obviously affects their gains and reputations.

TERRAIN (ROAD CONDITIONS)
The nature of the Ghanaian terrain requires extra protection. Made for Ghana vehicles thus come equipped with a rough road/severe usage package like reinforced suspensions, a suitable vehicle ground clearance, heavy duty shock absorbers and reinforced bushings. Vehicles for European markets do not have these additional Features, according to the Ghana Automobile Distributor Association.

BOTTLENECKS IN THE GHANA AUTO-MARKET
In any properly controlled economy, necessary agencies are put in place by the government to regulate the importation, sales and use of such products as important as an automobile. Sadly enough, this has not been the case with Ghana where there are many grey importers who knowingly or unknowingly would bring in vehicles that are neither environmentally conducive nor mechanically compliant.

This definitely is an anathema that impedes national development. For example:
• These grey imports make it impossible to render accurate sales figures hence the inability of economic planners to have the appropriate statistical figures to help plot growth in the sub-sector.
• In views of this negative practice in the Ghanaian auto-market, the inherent results are environmental pollution with its health hazards and accidents.
• Currently, this grey market is forming a significant part of the auto market that is fiercely competing against genuine products for sub-Saharan

Africa with some manufactured in South Africa.

The situation has established a very strong challenge for the organized and gunuine auto market brand builders who invest their monies in the business for long term gain. The peculiar attractions based on opulence and hi-tech features take vast range of attentions comes with loads of problems when imported into the tropical zones like Ghana.

• Instead of desired values, users have to grapple with increasing stress levels involved in the usage of the grey imported cars.
• Due to the quality of these grey imports, the maintenance cost is usually very high, thereby creating financial nightmares for users. And a disturbing aspect is the distrust which customers develop for the genuine brand holders, thereby affecting the economic fortunes of the authentic auto brand builders.

Thomas Pelletier, former President of the Ghana Automobile Distributors Association (GADA) hightlighted that grey vehicles are prone to the following problems:

1. Constant technical or mechanical problems
2. Grey dealer not equipped to fix these problems according to manufacturer’s guideline
3. The grey dealer lacks the genuine spare parts to fix the vehicles in the event of faults.
4. In the case of faults or failures, the cars cannot be recalled to designated workshops for appropriate maintenance and this can lead to fatal accidents.

Mr. Jihad Hijazi, the CEO of Hyundai dealer Auto Plaza Limited, pointed to the reality that there is grey market in Ghana, but deviated from the opinion of others. He thinks the grey market prevails because dealers over-price their brands, something his brand does not suffer from due to appropriate pricing.

The Hyundai brand not feeling the impact may also be attributed to its newness in the market and people are just beginning to embrace the brand’s adopted fluidic designs, which have made its sales soar. Soon or later, it is expected that the impact will be greatly felt.

As we point to the fact that imported new cars are not tropically suitable for usage in our clime, it is also important to look into the reality of the unfavourable economy. A young man or woman earning an average income may nurse the intention of acquiring new cars from authorized dealer but the economic situation may establish a very tall height of mirage for him or her to acquire a new car, due to cumbersome procedures attached to getting a loan.

Most people we interviewed prefer to buy grey imported cars than the ones from the authorized dealers. They agreed that authorized dealers offer reliable cars with the best in-class services and warranty, but it comes with a price which is too huge for their pockets to bear. If they consider to acquire new cars from the authorized dealers, price, interest rate and terms of repayment are the major factors that discourage them.