Motoring with Bob Roco ROMEO: Cedi strength drives down car costs

The Automobile Dealers Union of Ghana (ADUG) has announced a 15 percent reduction in vehicle prices nationwide. This effective adjustment is attributed to the stabilising of the Ghana cedi against the U.S. dollar and the government’s recent abolition of the COVID-19 Health Recovery Levy.

Impact on the Market

The price cut applies to a broad range of vehicles, including brand-new, hybrid, electric, and “home-used” cars. ADUG National President Eric Kwaku Boateng stated that the move fulfills a previous promise to review pricing once exchange rate conditions improved.

He emphasized that the reduction reflects the union’s commitment to national responsibility and fairness toward consumers, rather than maintaining excessive profit margins.

The move follows a period of extreme volatility. Vehicle prices surged throughout 2024 and early 2025 due to currency depreciation, rising import duties, and global supply chain disruptions.

The cedi, which traded near 16 per dollar in late 2024, has strengthened to approximately 10.98 cedis by February 2026, bolstered by debt restructuring and IMF program compliance.

Legislative and Tax Reforms

A significant driver of this relief is the COVID-19 Health Recovery Levy Repeal Act 2025, signed by President John Dramani Mahama. Effective January 1, 2026, the repeal eliminated a one percent charge on goods and services that had been in place since 2021. Finance Minister Cassiel Ato Forson noted that removing this “nuisance tax” relieves businesses and consumers of an estimated GHS3.7-billion annual burden.

Furthermore, the 2026 Budget introduced several pro-business reforms:

• The effective VAT rate was reduced from 21.9% to 20%.
• The VAT registration threshold was raised from 200,000 to 750,000 cedis.
• The National Health Insurance Levy (NHIL) and GETFund levies were recoupled, allowing for input tax credits.

Future Outlook and Challenges

While ADUG had signaled these cuts in mid-2025, dealers previously had to clear inventory acquired at higher exchange rates (above 12 cedis). Now that newer stock is arriving under more favorable conditions, the benefits are reaching the public. In Kumasi, some vehicles previously priced at 170,000 cedis have already dropped to 130,000 cedis.

Despite the optimism, economic analysts warn that sustained currency stability is vital for maintaining these lower prices. ADUG has also called on financial institutions to align their lending rates with the Bank of Ghana’s recent reduction of the Monetary Policy Rate—which dropped from 28% to 18%—to make vehicle financing more accessible for small businesses.

This price reduction is expected to provide substantial relief to the logistics, ride-hailing, and commercial transport sectors. While transport unions are monitoring these developments, they have yet to announce fare adjustments, citing the need to balance vehicle costs with fuel and maintenance expenses. As global supply chain pressures continue to ease, the Ghanaian automobile sector appears positioned for a period of renewed growth and affordability.

Post Views: 12