Home Development Rwanda now part of VW African expansion

Rwanda now part of VW African expansion

A mere two months after starting production at a low-volume car assembly plant in Kenya, Volkswagen SA (VWSA) has started discussions with Rwandan authorities for a joint venture, which could include not only local vehicle assembly but also car sharing and taxi services.

Business Day reports the production of Volkswagen vehicles at the new Kenyan plant near Nairobi started in January. The facility, owned by Kenya Vehicle Manufacturers, receives partly assembled Polo Vivo kits from VWSA’s Uitenhage assembly plant near Port Elizabeth in the Eastern Cape.

VWSA MD Thomas Schaefer says his company expected to send 1,000 Vivos to Kenya during 2017. This annual number would eventually rise to 5,000 as the Kenyan government made good on its promise to reduce the local market’s reliance on used Japanese imports by raising import duties.

Rwanda is similarly reliant on so-called “dumped” used cars, but Schaefer said government officials had made clear their desire to encourage a local motor industry. He said the capital, Kigali, was a small, compact city that lent itself to vehicle usage, as well as ownership.

A joint-venture model in Rwanda might include vehicle assembly, as well as car sharing, taxi services and other forms of transport. “We have not settled on a model yet,” Schaefer said. “Once we do, we will work out the details. In principle, it could be possible to start vehicle-assembly in Rwanda by the end of 2017.”

Business Day says while most multinational motor companies including VW, have chosen Nigeria as their second major African manufacturing base after SA, Schaefer said smaller markets should not be neglected. Tanzania and Ethiopia are both on VWSA’s radar for future deals.