Question

Mitsubishi Corporation plans to enter the markets of Ghana with its new Sports Utility Vehicle (SUV)-- the
Mitsubishi Sogo Sosha Model. You are the Sales Manager of Mitsubishi Corporation for Middle East and African
Markets. Prepare a report for the Board of Directors detailing the feasibility of the proposed venture. Your report
should include the following:

1.1 An analysis of the situation in the aforesaid country by using appropriate tools. (15)
1.2 Industry and its characteristics in the country. (20)
1.3 Recommended strategies and explain why they are the best fit. (10)
1.4 Implementation plans. (15)

Answer 1

Ghana is one of the most promising and fastest-growing automobile markets in the region. Ghana automobile industry is supported by multiple factors such as labor availability, RandD efforts, geographic advantage, and government support. With a positive outlook for the economy and greater household purchasing power, automobile sales in the country are set to witness a strong surge in sales to 2026.

The imports on automotive parts and components are likely to increase in the country as some of the democratic parties, like the New Patriotic Party, have planned to reduce corporate tax to around 20-25% and remove Special Import Levy in the country under its manifesto in 2016.

Market Overview

Ghana’s Automobile Market is expected to register a CAGR of 6.06%.

Ghana being the third biggest economy country among West African countries, is likely to experience growth in the automotive industry during the forecast period, owing to the increase in “Made in Ghana” vehicles, initiated by Kantaka Group in 2016 and increasing skilled-work force in Ghana automotive industry.

Increasing Passenger Car Demand

New passenger vehicle sales have shown an upward trend from 2,540 new vehicle registration in 2005 to 4,268 in 2018 although a spike in numbers was observed between 2011-2014 with an average of 6450 new vehicle registrations in these years.

Approximately 59% of the new vehicle market is made up of passenger vehicles as per the new vehicle registrations in 2017.

Amidst the growing GDP of the country and rising purchasing power, the passenger vehicle sales are also driven by the government purchases.

The most popular imported brand is Toyota, which accounts for more than half of the imported vehicles. These are primarily imported from the United States and the Gulf States.

In the absence of affordable finance solutions, used vehicles remain the more attractive option for private vehicle buyers as second-hand passenger cars accounted for about 70% of the passenger vehicles sold in the country in 2017.

Competitive Landscape

Some of the major players in the market include Toyota, Mahindra & Mahindra, BMW, VW, Kantaka Group, and etc., . Indian automobiles major Mahindra and Mahindra has invested heavily in the country and has made it as a regional hub for the manufacture of its Sports Utility Vehicles.

However, the presence of other international automakers like Toyota, BMW, VW, and etc. with their high brand perspective, reliability, and trust, among the people in Ghana, is likely to provide strong competition for the domestic manufacturer, like Kantaka Group. Mahindra & Mahindra occupied nearly 20% of the imported vehicles in the country, with its popular vehicle model sales, like Genio, XUV, and Xylo.

Market Entry Strategy
For a company like Mitsubishi, a market entry program should be robust and fail-safe. There would be three major components of this strategy.
1. Product – The product should be a good value for money as it will be contesting against the widely accepted SUV’s products from Toyota, Nissan, VW and Kia. So the features and build quality should be very attractive to achieve a good market share.

2.   Pricing – The pricing would be the crucial factor for the success of this effort. The price competition is wide open starting with Mahindra’s low cost offering to market Leader Toyota’s brand equity component. The ideal positioning would be just above Kia’s Sportaz or at par with Hyundai’s Tucson, a bit lower than Nissan’s equivalent product. That will help to build confidence among the target segment.

3. After-sale Service and Brand ecosystem - This is another important market entry factor especially a country like Ghana where the used car market dominates the most no of sales. If Mitsubishi can create a favorable brand awareness and respective ecosystem that will help to boost the brand reliability.

Implementation Plan
1. At the very beginning, it is highly recommended that Mitsubishi should focus on creating enough support and service points and invest to look for market partners to create a well-trained workforce.
2. Instead of importing a CBU, look for an assembling center to cut down the cost and make the pricing competitive enough.
3. The third recommendation is to initiate a buyback offer like premium cars. As the car financing is not easy in Ghana as a buy-back scheme will act as a sales booster for sure. Secondly, it will increase the car value in the used car market which will create a brand reliability factor and a favorable ecosystem