German car maker Volkswagen has been very successful in Africa over the years – proud to be the passenger market leader in South Africa. Volkswagen Group South Africa has actively invested in new markets all over Sub-Sahara Africa, by setting up factories in Kenya, Rwanda and Nigeria. Club Africa asked Thomas Schaefer, Chairman & Managing Director at Volkswagen Group South Africa, about current business growth and future plans, in ‘new’ Volkswagen countries such as Ghana, Ethiopia and Congo.
How is Volkswagen performing in South Africa?
“Volkswagen has been passenger market leader for the last seven consecutive years and well on the way to retaining this title in 2018. Our plant in Uitenhage is operating at full capacity with 3 shifts a day. We will produce some 137 000 cars for both local and export markets this year and anticipate that we will reach 165 000 vehicles in 2019 an all-time record.”
In 2016, Volkswagen Brand CEO Herbert Diess said: “Overall car sales in Africa are bound to rise by 40 percent within the next five years, that is why we are expanding our business.” What is your outlook on car sales in Africa today?
Thomas Schaefer: “We remain confident that Africa is a key growth market for vehicle sales going forward. There is a perception that there is a limited and small market for cars in Africa, in fact there is a huge market for vehicles in Africa, the problem being that this market is largely made up of used vehicles. So, what is required to build a new car market apart from the natural growth through increased population and income levels increasing? It is to develop automotive policies, that restrict the importation of old used cars and promotes the production and sale of new vehicles. Countries like Kenya and Rwanda as well as Nigeria have started taking steps in this direction.”
What areas on the continent do you regard as most promising?
“We are responsible for Sub Saharan Africa and see potential in many of these countries for car sales and have established small assembly operations in Nigeria, Kenya and Rwanda. We have signed an MOU with Ghana and plan to establish a small assembly plant there in 2019. We are also in discussion with the Ethiopian authorities about a possible automotive project in the future.”
What is the current situation of your (new) assembly plants in Kenya and Rwanda? How do you feel about the East African market?
“These are small assembly operations that are in their infancy with a capacity of 5000 units per year – this can be expanded quite quickly if demand allows us to. We also have retail outlets and sales are going according to plan with Rwanda now coming on stream. Our mobility solution for Rwanda has commenced with community car sharing and this will be followed shortly with ride hailing.”
How important is Nigeria to your West Africa expansion plans?
“We are working together with the AAAM (African Association of Automobile Manufacturers) and the government to develop Nigeria into an Automotive hub for assembly and supply operations. I cannot be more specific; apart from our own small assembly operation we want to work with the other interested parties to develop a thriving motor industry in Nigeria.”
Any new headlines in the making?
“We are exploring opportunities with Ethiopia. Furthermore: we will be introducing the first electric vehicle from our Group in 2019 with the launch of the Audi e-tron in South Africa. Over time we will launch more electric vehicles as availability and demand allows. We do see opportunities for electric vehicles in Africa going forward especially in countries like Rwanda and Congo where there is good hydroelectric power readily available.”