Volkswagen To Launch Vehicle Assembly Plant in Kenya

September 09, 2016 at 10:00 am | Money Moves

Fredrick Ngugi

Fredrick Ngugi | Contributor

September 09, 2016 at 10:00 am | Money Moves

Volkswagen vehicle assembly plant in South Africa. Deutsch Land

Volkswagen (VW) is set to resume assembling vehicles in Kenya by the end of the year in order to boost sales across the East African region, reports Reuters.

Announcing the planned launch on Wednesday, VW South Africa CEO Thomas Schafer said the intended production will initially focus on Vivo model vehicles.

“Volkswagen South Africa will now again establish an assembly plant to produce motor vehicles at the Kenya Motor Vehicle Manufacturers Limited in Thika,” President Uhuru Kenyatta added when he met with Volkswagen’s executives from South Africa.

The German car maker will join other global vehicle manufacturers in Kenya, including Toyota, Nissan, Isuzu, and Mitsubishi.

Many are keen to see how Volkswagen will maneuver in a market that’s flooded with cheap secondhand imports from Japan and the United Arab Emirates.

According to data released by the Kenya National Bureau of Statistics, Kenya mainly assembles buses, trucks, and pick-ups from imported kits; however, local assembly has been on a downward trend for the last few months.

This slowdown has largely been attributed to hard economic circumstances for local buyers, particularly the rising interest rates and cuts in government spending. But according to Reuters, Volkswagen says it has identified an opportunity in the market.

“We believe that Kenya has got the potential to develop a very big fully fledged automotive industry. The East African Community has got the potential, and today is the first step in this direction that we want to take with our passenger cars,” Schafer said.

The German car manufacturer has been out of Kenya for four decades, only operating from South Africa and exporting its cars to the rest of Africa.

VW is the second-largest auto maker in sales in South Africa after Toyota.

And while the company did not disclose how much it will be investing in the Kenyan assembly plant, VW’s return to Kenya comes at a time when the country is already building vehicles suited for the local market with the help of Mobius Motors.

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