JOHANNESBURG - Thomas Schaefer, the chairman and managing director of Volkswagen Group South Africa, said a team was established last month that would go from country to country to assess opportunities.
The establishment of the team follows Volkswagen South Africa earlier this 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 rationalisation strategy.
The new sub-Saharan Africa region will join Volkswagen AG’s existing regions of North America, South America and China.
VW's Polo Vivo plant in Port Elizabeth. Picture: Supplied
Schaefer said their major activity to date had been in Kenya and Rwanda but both have held back for political certainty following elections there.
Volkswagen previously signed a memorandum of understanding for a new integrated mobility concept in Rwanda that would result in an environmentally compatible local vehicle production facility being established in Kigali.
“That mobility company consists of ride hailing, car sharing and various sub groups. To calculate each of the arms is almost like a separate company and it's a super complicated business model,” Schaefer said.
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“We have done all of that and it looks super profitable and extremely promising so we are now in discussions with landlords about buildings. There's some homework to be done but the plan is to be operational by early next year at the latest.”
VW South Africa has already established an operation in Kenya for the assembly of Polo Vivo models using vehicle kits exported from its manufacturing plant in Uitenhage.
Schaefer said its Kenyan operations were doing well but VWSA did not have any further Polo Vivo kits to provide them with because the model was in the run-out phase on strong demand from the South African market.
“We allocated, in the first shot, 500 Vivos to them so they could slowly start but those are now gone and we can't give them anymore.
“But early next year, when the new Vivos are available, we'll push strongly. I’m happy with the progress,” he said.
Volkswagen is taking expansion into Africa very seriously. Photo: Bloomberg
Schaefer added that they had been in intensive discussions with the Kenyan government on how Volkswagen could grow the automotive industry in the country and entire East African Community (EAC) region.
This involved reducing used vehicle imports, getting vehicle financing right and promoting locally assembled vehicles.
He stressed that the more volume that was produced in South Africa, the more sustainable it made its operations in the country.
“The Vivo is in the budget car space but we can demand a premium because of the quality. Going forward we need to produce 70000 to 100000 cars a year to be really profitable.
“We do about 50000 a year for South Africa and if we can add another 30000 to 50000 units a year it would be perfect and make it cheaper for South Africa as well,” he said.