Volkswagen (VW) yesterday (7 July) began vehicle assembly operations in Nigeria through local firm Stallion Group, reports Bloomberg. The joint-venture (JV) partners operate an assembly plant in Lagos, which will produce VW's Passat and Passat CC sedan models, the Jetta, and the Amarok pick-up truck. Further details, including the annual production capacity of the plant and investment levels, have not been revealed.
Significance: VW had a manufacturing presence in Nigeria during 1973–94 through a JV with the Nigerian government, which operated a plant in Lagos. The subsidiary, known as Volkswagen Nigeria, had a production capacity of 39,000 cars and light commercial vehicles per year. Production at the plant was suspended in 1994 when the German company withdrew its expatriate employees, frustrated with what it saw as the non-committal attitude of the government. VW's decision to re-enter local manufacturing follows the enforcement of the new National Automotive Industry Development Plan (NAIDP) by the Nigerian government in 2013. The NAIDP raised duties on imports of completely built-up (CBU) units in Nigeria sharply to 70% from 20%. This increase was intended to discourage vehicle imports in the country and encourage local production. The opening of an assembly plant in Nigeria by VW is a positive development as the automaker can use it as a hub to supply other markets in the Middle East and Africa. VW already operates a plant in Eastern Cape (South Africa), which produces more than 110,000 units each year, according to IHS Automotive data.
