Volkswagen targets wider East Africa with car assembly plant in Kenya

Car maker Volkswagen(VW) has announced a major comeback into the wider East Africa market with the establishment of a car assembly plant in Kenya to resume producing cars by the end of 2016 four decades after it paused operations in Kenya.

Volkswagen South Africa’s Chief Executive confirmed the news and said that VW will establish a car assembly plant in Kenya to primarily produce its new Vivo model

The President of Kenya, Mr. Uhuru Kenyatta also attested to the reports and said that there South African counterpart will establish the plant in Kenya.

“Volkswagen South Africa will now again establish an assembly plant to produce motor vehicles at the Kenya Motor Vehicle Manufacturers limited in Thika,” The President announced after meeting with Volkswagen South Africa executives.

VW’s assembly plant would commence with their brand Vivo and expand to a range of other vehicles, with the first car anticipated to be rolled out before the end of the year.

VW, which assembled cars in Kenya in the 60s and 70s, will now be part of other brands that are already being assembled in the country, namely Isuzu (7202.T), Toyota (7203.T), Nissan (7201.T) and Mitsubishi (8058.T).

Trucks, pick-ups and buses from kits supplied by foreign manufacturers were the ones being assembled in Kenya although data from the Kenya National Bureau of Statistics revealed that the number of vehicles assembled between January and April went down 31 percent year-on-year to 2,258 vehicles and this is attributed to tough economic conditions for buyers, including high interest rates and cuts in government spending; this is according to The Kenya Vehicle Manufacturers Association (KVMA)

Volkswagen is currently ranked as the second-largest auto maker by sales in South Africa after Toyota (7203.T) with its vehicles are sold domestically as well as exported to the rest of Africa.

The amount VW was investing in or what the plant’s production capacity would be cost was not mentioned.