Volkswagen To Begin Auto Assembly Again In Kenya After 40 Years
The first Volkswagen car assembled in Kenya in four decades is expected to roll off the production line Wednesday.
Volkswagen South Africa is leading an expansion into Africa. The German auto manufacturer wants to create a new region for the group in Africa. The Polo Vivo has been produced in South Africa until now.
Part of the Volkswagen strategy is to develop affordable financing packages with local banks that will expand the new market significantly, according to a report in Citizen Digital.
The Kenyan production facility will be VW’s third on the continent, Independent Online reported. The group already has a vehicle manufacturing plant in Uitenhage, South Africa, and started an assembly operation in Nigeria in 2015.
Operations will begin on a small scale with the Polo Vivo model in Kenya, with a goal of increasing production up to 5,000 units a year from 2017.
If demand is high, the production facility near Nairobi in Thika can produce additional models such as the luxury brands SUV Tiguan and Passat, Kenyan government spokesman Manoah Esipisu said in a prepared statement.
Volkswagen hasn’t assembled cars in Kenya since the 1970s when it manufactured the Beetle model, The Nation reported.
“It is evidence that we have put in place the right policies and are promoting the right environment for industry to grow, for business to grow, for jobs to grow,” President Uhuru Kenyatta said Sunday in a State House statement.
Kenyatta is expected to reopen the Volkswagen assembly plant Wednesday — a sign of Kenya’s improving business environment, Kenya’s State House said.
“Part of the strategy is to develop affordable, innovative financing packages with local banks that will expand the new market significantly,” State House Spokesman Manoah Esipisu said.
Other auto makers including Japanese manufacturers like Toyota, Mitsubishi, Isuzu and Nissan already assemble cars in Kenya, according to The Nation.
Used car sellers account for about 80 percent of total vehicle sales in Kenya, according to Daily Nation. Kenyans usually buy second-hand imports, often from Japan or the United Arab Emirates. Volkswagen said earlier this year that it is expanding in Africa to reach this untapped market.
Volkswagen is expanding the successful Polo Vivo from South Africa to Kenya to leverage the enormous growth potential of the African car market, Independent Online reported.
“This compact model is the best selling car in the sub-Saharan region, so it is the ideal entry model for the promising Kenyan market,” said Matt Gennrich, spokesman for Volkswagen South Africa. “With this move, we are strengthening the brand’s overall position in Africa and taking an important step towards expanding our commitment in the region.”
The Polo cars will be assembled using vehicle kits imported to Kenya from VW’s Uitenhage, South Africa, plant, Gennrich said in a September report.
“We are targeting a price below Sh2 million (about $19,500 US) for the Polo Vivo,” said Zarak Khan, CEO of Kenyan auto dealership DT Dobie.
The same new model sells for about $12,700 in South Africa, according to Daily Nation.