File picture: Fabian Bimmer / Reuters.
PRETORA - Volkswagen has established a new company in Rwanda and plans to spend about $20 million in the first phase the roll out of its integrated automotive mobility solutions strategy for that country, a worldwide first for the German-based vehicle manufacturing group.

The strategy is to be rolled out by Volkswagen Mobility Solutions Rwanda under the auspices of Volkswagen Group South Africa (VWSA), which is responsible for the sub Saharan Africa region.

It is envisaged it will lead to the provision in Rwanda of community car sharing, a ride hailing service, public car sharing, a shuttle service and a peer-to-peer car sharing service.

It follows Volkswagen signing a Memorandum of Understanding (MOU) with the Rwanda Development Board (RDB) in December 2016 to conduct a detailed study to develop a business case for Volkswagen to introduce an integrated automotive mobility concept in Rwanda.

Thomas Schaefer, the chairman and managing director of Volkswagen Group South Africa, said yesterday (thurs) the group’s studies were complete and they believed they had a business case that would work.

“We are now ready to commence with the implementation of our plans for Rwanda. In short after today there is no going back. We are now fully committed to implementing our unique integrated automotive mobility solution in Rwanda,” he said.

Clare Akamanzi, the chief executive of the RDB, said they were delighted with the progress that had been made since they signed the MOU with Volkswagen in 2016 and were ready to partner with Volkswagen as the group implemented its integrated automotive mobility solutions and vehicle assembly operation in Rwanda.

“Our country is determined to become the leading innovator in Africa. This project is in line with Rwanda’s policies to protect the environment, create jobs and reduce our trade deficit.

“We are confident that this partnership will help create countless opportunities for young Rwandans, not only in terms of employment but also in terms of skills transfer,” she said.

Schaefer said the production facility would have an initial annual installed capacity of up to 5000 units.

He said this year would be their “start-up year” and the product portfolio would initially include the Hatchback Polo, the Passat, a sedan and possibly the Teramont, a large special utility vehicle (SUV).

Schaefer added that Volkswagen had signed an MOU with CFAO for an in principle agreement to run the production and retail operations, which would include the importation of other Volkswagen models to be sold in the Rwandan market.

Volkswagen has other successful partnerships with CFAO, including the running of the group’s production facilities and the retail operations in Kenya.

Schaefer said the current business plan in Rwanda assumed employment of between 500 and 1 000 people in Kigali in phase one for Mobility Solutions administration, production, training, sales and service and the drivers.

A Rwandan software development start-up company, Awesomity Lab, has been appointed to develop the mobility services App through which all bookings and payment would be made.

Services would also be able to be booked online or via a hotline to cater for people who did not have a smartphone.

Schaefer said the first service to be offered would be community car sharing, which would be launched in the second quarter of this year with about 150 vehicles in service within a few months.

This would be followed later this year by a ride hailing service with an initial about 150 vehicles planned, he said.

Schaefer said they planned to launch public car sharing, initially with about 250 cars, next year followed by a shuttle service and peer-to-peer car sharing service.

He said these numbers were based on assumed market demand because such an innovative integrated mobility solution was a first for the automotive industry.

VWSA last year established a permanent team to drive its expansion into sub Saharan Africa, which aimed to make its South African operations more sustainable.

This VWSA earlier in the year assuming responsibility for developing and networking 49 states to form the new sub Saharan Africa region in the Volkswagen Group as part of a regionalisation strategy.