logo

Volkswagen to open plants in Kenya, Rwanda

PUBLISHED: Thu, 22 Dec 2016 09:26:51 GMT

Share

Volkswagen on Wednesday inaugurated a vehicle production facility in Kenya and revealed plans to start assembling cars in Rwanda by end 2017.

READ:Volkswagen targets East Africa – CNBC Africa 

The Government of Rwanda signed a memorandum of understanding (MoU) with Volkswagen Group for a new integrated mobility concept Wednesday evening. The signing took place at the Marriot Hotel. According to a statement on the Republic of Rwanda’s website, “The concept includes car sharing and ride hailing services as well as the establishment of a local production facility in accordance with the environmental standards of Volkswagen’s Think Blue”.

— Government of Rwanda (@RwandaGov) December 21, 2016

“In addition, possibilities of training initiatives for the local population are being investigated together with other German companies”. 

The MOU signing between @RDBRwanda & @Volkswagen South Africa is a #MadeInRwanda breakthrough within the
automative industry in Rwanda pic.twitter.com/S40bQ1toaK

— Rwanda Development (@RDBrwanda) December 21, 2016

Explaining the rationale for the deal Thomas Schäfer, CEO of Volkswagen Group in South Africa said: “Volkswagen is consistently developing market potentials in Africa. Only a few hours ago, we inaugurated our third production facility in Africa in Kenya. Today in Rwanda, we are launching a concept that will foster individual mobility in this rapidly developing country and make this market a further pillar of the Volkswagen brand’s commitment to Africa”.

Schäfer added that the implementation of the MoU will start with an investigation phase in January next year; and if all goes as planned, the first cars will be assembled in Rwanda before the end of next year.

The Rwanda Development Board (RDB) welcomed the Uber like innovative approach to mobility concepts.

The RDB’s CEO Francis Gatare said Rwanda is a competitive place to do business and this was demonstrated in many international rankings that capture the ease of doing business around the world.

“Rwanda has been putting in place infrastructure for technology and connectivity that makes it a convenient place to experiment in new ways of mobility that have not been integrated in other African markets,” he said.

“We have 100% 4G connectivity across the country,” he said, which along with our population and location, “makes a strong business proposition for VW and other companies to do business here.”

The RDB is not in talks with other international car manufactures at this stage. However, Uber, which does not yet operate in Rwanda, is working with local regulators to put in place platforms to become operational, according to Gatare.

The impact the assembly plant will have on Rwanda’s economy and jobs is not yet clear. But the RDB CEO said estimates had forecast between 5000 and 10 000 cars could be manufactured from the plant.

In Kenya, Volkswagen inaugurated a vehicle production facility in the industrial town of Thika. Kenya’s President Uhuru Kenyatta and Dr Herbert Diess, CEO of the Volkswagen brand, were present when the first locally produced Polo Vivo rolled off the production line. 

At the inauguration, Diess underlined Kenya’s key role within the Volkswagen brand’s Africa strategy: “After over 60 years of Volkswagen vehicle production in South and North Africa, I am delighted to now have a further site in Kenya. We will systematically continue to develop our position in the fast-growing African car market.”

The Volkswagen Kenya Polo Vivo car will retail at Ksh1.65M. #KaribuVWpic.twitter.com/BcNK5EFhqB

— Adan Mohamed (@AdanMohamedCS) December 21, 2016

In addition to vehicle production, Volkswagen will be offering Kenyan customers a comprehensive package including a manufacturer’s guarantee as well as a maintenance and service plan. Financing schemes will be developed together with local banks in order to allow individual mobility and to provide Volkswagen with the impetus it needs for its re-entry to the Kenyan market.

President Kenyatta said: “A few months ago, this was only a dream. Now Volkswagen’s investment in Kenya has become reality. This is further proof of my government’s determination to strengthen the production location of Nairobi and to forge ahead with the industrialization of the nation.”

The decision by the Volkswagen Group to invest in Kenya resonates well with my Administration’s stated policy to industrialize our economy. pic.twitter.com/SAjUisaNpW

— Uhuru Kenyatta (@UKenyatta) December 21, 2016

The joint project implemented together with DT Dobie in Thika near to the Kenyan capital Nairobi is Volkswagen’s third production plant in Africa, together with one plant in South Africa and one in Nigeria. In the initial phase, annual production of up to 1,000 vehicles is planned. In the long term, it will be possible to produce up to 5,000 units per year at the plant of Kenya Vehicle Manufacturers (KVM). The assembly facility is flexibly designed and offers the possibility of investigating the production of further models in the event of positive developments in the new car market. In addition, the Volkswagen Group recently announced plans to start vehicle production in Algeria.  


Get the best of CNBC Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent. Sign up here.