Nigeria: Rwanda Takes Advantage As Nigeria Struggles With Auto Policy

6 July 2018

As the Nigerian government is not getting serious with its auto policy, other African countries are taking the bull by the horns by dangling carrots before world class auto makers. Some of the auto companies who initially wanted to make Nigeria their base in Africa are looking at other African countries that are giving them more conducive environment to set up plants and produce modern automobiles rather than depending on imported used cars from Europe and America.Only last week, the volkswagen group opened up a plant in Kigali, Rwanda to produce state of the art automobiles.

The Volkswagen brand which is expanding its engagement in Africa recently started its Integrated Mobility Solutions in Rwanda that includes local vehicle assembly, innovative mobility services and a sales and service retail outlet CFAO Volkswagen Rwanda. Thomas Schäfer, CEO of Volkswagen Group South Africa and responsible for the Sub-Sahara region, officially launched the project in the capital Kigali in the presence of His Excellency, Paul Kagame, President of the Republic of Rwanda. Volkswagen is thus taking the next step toward developing new up-and-coming markets. In a long-term perspective, the brand intends to play a leading role in the emerging automotive industry in Africa. With this engagement, Volkswagen is making a substantial contribution to Africa's economic development.

Thomas Schäfer said: "Rwanda has great potential. The country is young, modern and hungry for individual mobility. With a package specifically tailored to the region comprising local vehicle production, new vehicle business and innovative mobility services, we intend to harness the opportunities for growth and create new opportunities. Rwanda can become a blueprint for other African and emerging markets."

At the centre of the project are app-based car sharing and ride hailing offerings that take individual mobility to a broader share of the population. The project kicks off with community car sharing primarily aimed at companies in the capital, Kigali. A ride hailing service will follow later this year. Further mobility services are planned for 2019. Rwanda is the ideal market for new mobility solutions because the people there are very digitally-minded and tech-savvy. Moreover, demand for mobility is growing and the present offerings can scarcely keep pace with these needs.

On the production side, local assembly of the latest generation Polo and Passat will now commence with other models planned for the future. Initially it is planned to build up to 1,000 vehicles per year depending on demand and the success of the mobility fleet, with an annual production capacity of up to 5,000 units. Assembly is flexibly designed and can be expanded if required. The sales and service retail outlet CFAO Volkswagen Rwanda is part of the same complex and guarantees comprehensive customer service. Volkswagen will spend some US $20 million in Rwanda for phase one.

Sub-Sahara strategy: presence in the growth markets of the future

Volkswagen is also driving its Sub-Sahara strategy further forward with the start of production operations and market activities in Rwanda. The brand will be significantly expanding its engagement in Africa and its long-term goal is to play a leading role in the emerging automotive industry in Africa. To that end, the brand will be establishing several pillars in the region and pursuing rapid and flexible expansion over the coming years. That will lay the foundation for participating in the region's future growth. In addition to Rwanda, Volkswagen is already active in South Africa, Nigeria, Kenya and Algeria. Further locations are already being planned.

Under its TRANSFORM 2025+ brand strategy, Volkswagen is strengthening the regions and focusing on new up-and-coming markets. Alongside North and South America as well as China, the Sub-Sahara region plays an increasingly important role. Although the African automotive market is comparatively small today, the region could develop into an automotive growth market of the future.

Thomas Schäfer commented: "Volkswagen is one of the pioneers in Africa. Over 60 years ago, Volkswagen established its first plant outside of Germany in South Africa and now we are the first in the Sub-Sahara region. Obviously there are some challenges, but there are great opportunities as well. By starting out with several, smaller operations we can learn and respond flexibly to developments. At Volkswagen, we believe in Africa."

His Excellency, Paul Kagame, President of the Republic of Rwanda said: "Africa does not need to be a dumping ground for second hand cars, or second hand anything. In the long run, you end up paying a higher price anyway. If you can pay a high price for second hand, why not pay a high price for something new? It is a simple choice. Africans, Rwandans, we deserve better. This is one way of showing how we can afford it. For these and other reasons, this promising partnership with Volkswagen is off to a good start."

Contribution to Africa's economic development

Volkswagen is not only seeking commercial success in Rwanda, but also intends to make a sustainable contribution to economic development in the region. Among other things, the brand is creating up to 1,000 new skilled jobs and setting up a qualification and training center together with other German companies. Employees working in the assembly operation have been trained by qualified Volkswagen instructors in Kenya and are ready to commence with production. Drivers for the mobility services will shortly be recruited and trained by Volkswagen and specialists in this field. Furthermore, Volkswagen collaborates with local partners and suppliers wherever possible. The app for the digital mobility services was developed by a start-up based in Kigali.

As Thomas Schäfer explained: "Rwanda and Africa are much more than just another market for us. We see ourselves as part of African society and want to be a good, reliable partner for people here - as at all of the Volkswagen Groups 122 locations worldwide."

German Federal Minister Dr. Gerd Müller said: "Volkswagen's new project in Rwanda is the kind of activity we would like to see copied by other German companies. We want many more of them to launch new business ventures in Africa. Volkswagen has brought good ideas and a generous dose of pioneering spirit to this project and together with its German and Rwandan partners is developing a viable mobility concept for the future for Rwanda."

"We are pleased to support this project through Germany's development cooperation. These companies are making a direct contribution towards sustainable economic development - and that is totally in keeping with the idea of our Marshall Plan with Africa. The only way for people in Rwanda and in other places to have an attractive future in their own countries is if they can be offered high-quality training and good jobs where they are," Minister Müller added.

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