Volkswagen planning to set up shop in Kenya

Written by

The beetle or as many knew it ‘gari chura’ was a hit back in the ’60s for its unique shape and hipster look with the convertible model being the most sophisticated. Even with other models, the beetle was Volkswagen signature model, with every mention of the brand being associated to it.

Volkswagen, German based manufacturing company, the largest and leading producer of cars in the world is set to open a car assembly plant to be based in Thika. The plant is in line with the company’s goals of expanding their reach in the East African region. The plant which will operate at Kenya motor vehicles limited will be joining Isuzu, Toyota, Nissan and Mitsubishi, leading brands that are already assembling vehicles in the country.

According to Thomas Schafer, the managing director Volkswagen South Africa, the move to set up in Kenya was influenced by Kenya’s great potential to develop a fully fledged automotive industry. It is also a way for the brand to strengthen its presence in Africa and expand its commitment in the region.

The Kenyan plant will be the third Volkswagen assembling plant in Africa after South Africa and Nigeria. The plant will operate as a subsidiary of the South African factory and will work jointly with DT Dobie that previously imported and stocked the model.

The Volkswagen plant is not really new as the company previously operated in Kenya during the 60s assembling the beetle, VW vans and microbus until 1977 when it was shut down.

The plant will roll out its first car, the polo vivo model, in December. The model was South Africa’s best selling car in 2015 with over 2000 units having been sold. It is from this that company believes the model, a low-cost car, will resonate better with the Kenyan market compared to other models.

With the new plant, Volkswagen plans to produce over 5000 units of the polo vivo come 2017 with possibility of producing more and even different models depending on how responsive the market will be.

Volkswagen will also establish a training center to train production workers on Volkswagen operations and  standards with the company looking to eventually open up the centre to the public, offering basic training on general industrial skills.  This move will see employment opportunities and entrepreneurship increase  in Kenya and East Africa as a whole.

Establishment of the plant means more job opportunities to Kenyans and improvement of the Kenyan economy. Hopefully the competition that will arise will see the cost of cars go down meaning more Kenyans will be able to afford better vehicles at a better price. Volkswagen spare parts which have been both hard and expensive to acquire will also be readily available in shops.

With big companies such as Cadbury and Eveready having exited the Kenyan market due to unfavorable business conditions, re-entry of Volkswagen into the market is proof of the government’s promise to improve the ease of doing business in Kenya. The re-entry and establishment is also likely to entice other foreign investors to invest in the country.

What is your opinion on the topic?
Lilian Mutinda
Article Tags:
·
Article Categories:
BUSINESS