Bandy Auto Auction Center

Prepared for: Joseph Kojo Owusu Prepared by: Development Consulting

International, LLC

Presentation Outline

• Purpose

• Site Location

• Site Plan

• Project Benefits

• Project Competitiveness

• Profit Potential

• Costs

2013 Toyota Camry Hybrid Source: MotorTrend.com

Purpose

Historical Demand for Autos in Ghana:

Current Rates and Future Projections:

The Bandy Auto Auction Center will:

• Serve as Ghana’s only central hub for the exchange of autos; a sector with rising market demand

Source: Ghana Statistical Service (2008)

Purpose (continued)

• Feature five separate tracks to allow multiple auto auctions at one time

• Provide low-cost, mechanical inspection services on site

• Offer a testing track to ensure customer satisfaction

Purpose (continued) • Employ at least 30 staff in high-paying,

sustainable jobs in mechanics, sales, customer service, and site security

• Set the standard for automotive trading and transportation-based development in West Africa and lead to the expansion of a cluster of additional businesses around the greater Accra region

Site Location Convenient Location• Near Kpong, Ghana

• Connected to Tema-Jasikan Rd

• 30 minute drive from Tema/port

• 40 minute drive from Accra

Site Plan • Buildings

• Main building (office, water, food, restrooms)

• Auction room

• Checking center

• Mechanic shop

• Testing driveway

• Green space & wetland

• Wall and road spike

• Connecting road to Tema-Jasikan Rd

Phase 1 Design

Site Plan (continued) • Parking

• General

• 76 employee and customer (including disabled)

• Inventory:

• 626 (Phase 1) to 1567 cars (Phase 2)

Phase 2 Design (includes additional parking capacity)

Benefits of an Auto Auction • Decrease the price of autos in Ghana

• Increase market transparency, fairness, and price stability

• Modernize Ghanaian market and improve international trading

• Increase local employment and national tax revenue

Benefits (continued)• Under the current Ghanaian Auto Market…

o Overpriced vehicles due to uncompetitive markets

• With the Bandy Auto Auction Center…o Competition creates lower and more accurate price

point

Benefits (continued)• Under the current Ghanaian Auto Market…

o There exists low transparency for auto purchasing, as buyers must purchase on streets or online without adequate standards or testing facilities

• With the Bandy Auto Auction Center…o Transactions are visible, under the guidance of

certified mechanics, and within a modern testing facility. Better value assessments lead to more stable prices!

Benefits (continued)• Under the current Ghanaian Auto Market…

o Auto trading is limited within Ghana due to factors mentioned prior

• With the Bandy Auto Auction Center…o Modernization of Ghanaian auto market and set the

regional standard for international trade, which will eventually include other trading items such as heavy equipment and septic tanks

Benefits (continued)• Under the current Ghanaian Auto Market…

o Only 19% of Ghanaians are employed in the formal private sector

• With the Bandy Auto Auction Center…o Over 30 direct, high-wage, long-term jobs are created

in sales, trade, mechanics, and site security. Advertising and utility companies will gain business as well and construction workers will be needed immediately

Benefits (continued)• Under the current Ghanaian Auto Market…

o Limited tax revenues as auto purchases occur outside of the formal marketplace

• With the Bandy Auto Auction Center…o Increase tax revenues for Ghana (i.e. corporate, income

taxes, sales, and service taxes) and raise the nation’s global domestic product (GDP)

Construction Phase Operations Phase (Year 1)

Local economic impacts $2,796,702 USD spending on construction materials primarily in local market

$227,200 USD in annual wages to local workers

National economic impacts

$47,357 USD on taxable, imported goods

$596,728 USD income tax to national government

Capital Costs$4,022,648 • Capital costs largely due to initial construction

phaseSite construction

Gas station

Equipment

Office supply

Connecting road

Generator

Initial inventory of cars

Site design and business plan consulting

Operational/Annual Costs$487,477 • Wage costs are largest expense during post-

construction, operating phase

Management and labor

Utility

Insurance

Bandy Auto general supplies

Mechanic shop maintenance

Infrastructural maintenance

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Profitability• Revenue Streams• Exhibition fee: $25 per car

• Test drive fee: $2 per car

• Trading fee: $300 per car

• Mechanic exam fee: $50 per car

• Estimated Auction Center Demand: • Exhibit 60 cars per day• Test drive 10 cars per day• Selling 10 cars per day• Mechanic exam 5 cars per day

• Annual revenue $1,888,983 (projected nine year average)

Profitability (continued) • Payback period = less than 5 years

Year Annual Profit in Present Value (P/F) Cumulative Profit Cumulative Difference between Capital Cost and Profit

1 $589,186.58 $589,186.58 -$3,433,461.49

2 $623,135.31 $1,212,321.89 -$2,810,326.18

3 $649,836.04 $1,862,157.93 -$2,160,490.14

4 $993,679.34 $2,855,837.27 -$1,166,810.80

5 $1,037,362.22 $3,893,199.49 -$129,448.58

6 $1,095,066.86 $4,988,266.36 $965,618.28

7 $1,081,227.16 $6,069,493.51 $2,046,845.44

8 $1,123,055.92 $7,192,549.43 $3,169,901.36

9 $1,143,191.41 $8,335,740.84 $4,313,092.77

10 $1,128,952.51 $9,464,693.35 $5,442,045.27

Review • The Bandy Auto Auction Center will:

• Reduce the cost of and improve access to autos and other motor vehicles for all Ghanaians

• Set a transportation-based model for development and international trade in West Africa

• Produce millions USD in tax-based revenue for the Ghanaian government

• Produce hundreds of local jobs

Contact Project Leader:• Joseph Kojo Owusu

Project Support: • Development Consulting International, LLCWebsite: developmentconsultinginternational.orgEmail: development-consulting-international@googlegroups.com