On the 27th of June, German carmaker Volkswagen launched the country’s first-car assembling plant in Kigali, Rwanda’s capital investing 20 million U.S dollars into the first stage of operations which entails little manufafturing locally at the early phase. Volkswagen will build the cars in their global plant, partly dismantle them, then assembled back together in Rwanda. The plant was unviled by Rwandan President Paul Kagame at the Kigali Special Economic Zone.
“Africa does not need to be a dumping ground for second-hand cars, or second-hand anything, because in the long run Africans may end up paying a higher price anyway. If you pay a high price for second hand, why not pay for something new. Africa and Rwanda deserve better and this is one way of showing we can afford it. Some found it hard to believe that German cars could really be built in Rwanda. Yet today, the first vehicles are rolling off the assembly line. One of the first vehicles to come to Rwanda was Volkswagen,” Kagame said.
Knowing the fact that half of the nation won’t be able to afford the new cars being assembled at the plant, Volkswagen is taking a different approach by linking production to a ride-hailing and car-sharing service, stocked with its own vehicles. Volkswagen believes more people will pay to use a car, than buy one they can’t afford.
At first, firms and government agencies will be able to use shared vehicles; from 2019 a similar service will be rolled out to the general public, with cars stationed around the city. Anyone with the mobile app will also be able to call up a lift, starting this October. The cars will be used for a few years, then sold into the second-hand market, The Economist Reports.
Rwanda has great potential. The country is young, modern and hungry for individual mobility. With a package specifically tailored to the region comprising local vehicle production, new vehicle businesses and innovative mobility services, we intend to harness the opportunities for growth and create new opportunities. Rwanda can become a blueprint for other African and emerging market countries, CEO of Volkswagen Group South Africa and Sub-Sahara region, Thomas Schäfer said.
Volkswagen plans on assembling three models: the Hatchback Polo, the Passat and possibly the Teramont, a large sports utility vehicle. The Rwandan plant will have the capacity to assemble up to 5,000 cars per year, creating up to 1,000 jobs per year.
Kenya plans to lower the maximum age for imported vehicles, from eight years to five. Nigeria imposes tariffs of up to 70% on car imports. Firms such as Peugeot, Nissan and Toyota have also opened new operations in Africa.