Volkswagen has announced plans to resume vehicle production in Kenya after a long gap of four decades as part of its strategy to sell more vehicles in eastern Africa, the German automaker said in a press release. The company will begin local assembly of the Volkswagen Polo Vivo compact with the local importer DT Dobie at a plant in Thika near Nairobi by the need of this year. The assembly plant will roll out around 5,000 units the vehicle from the next year.
“We are taking the successful Polo Vivo from South Africa to Kenya to leverage the enormous growth potential of the African automobile market and participate in its positive development," said Thomas Schafer, managing director of 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,” Schäfer said.
Significance: The Kenyan vehicle market is dominated by Japanese automakers such as Toyota, Nissan, Mitsubishi and Isuzu. These automakers mostly assemble pick-ups, trucks and buses in Kenya from the kits imported from their other production bases. However, vehicle demand in the country is under pressure this year amid tough business condition for buyers including high interest rates and cut in government spending. According to the Kenya Vehicle Manufacturer Association (KVMA), new vehicle sales in the country dropped 30.2% y/y in the first six months of this year to 6,946 units. Despite this, some automakers foresee strong growth potential in Kenya, one of the key economies in eastern Africa and have announced investments in the country’s automotive market. Earlier in March this year, Daimler Truck started completely knocked-down (CKD) production of its Fuso line-up at the Associated Vehicles Assemblers (AVA) assembly plant in Mombasa. In June Indian automaker announced plans to invest INR700 million (USD10.4 million) in a bus assembly plant in the country. Volkswagen also foresees strong growth opportunities for its vehicles in Kenya. "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.
