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Volkswagen to produce first car in Kenya by December

BUSINESS
By Moses Michira | September 8th 2016
Vivo Volkswagen. Kenya will resume the assembly of Volkswagen in a plant in Thika and produce the first car by December. (PHOTO: COURTESY)

Kenya will resume the assembly of Volkswagen in a plant in Thika and produce the first car by December.

Volkswagen, the German-owned firm, has entered into an agreement with Kenya Vehicle Manufacturers through its South Africa subsidiary, one of the two manufacturing plants in the continent.

Volkswagen said the Thika-based plant will start to assemble its most popular models, beginning with the Volkswagen Vivo – a small sedan car.

President Uhuru Kenyatta said the plant will then expand into a fully-fledged assembly operation producing a range of vehicle makes.

“I am happy to welcome back the Volkswagen Group, currently the largest car manufacturer in the world, back to Kenya,” said President Kenyatta at State House, Nairobi, where he witnessed the signing of the agreement between Kenya and Volkswagen.

The German automaker used to operate in Kenya in the1960s until 1977 and used to assemble Volkswagen vans, microbuses and the famous Kombi. Volkswagen’s return to Kenya follows a similar move last July in Nigeria, where the firm had stopped production in 1990.

President Kenyatta said the return of Volkswagen is a sign of the economic transformation Kenya has undergone. He said the venture will create jobs for many Kenyans.

Four initiatives

Among the reasons that may have informed Volkswagen’s return is the rising income levels and a rapid population growth, offering a ready market for the automobile industry.

Registration of new vehicles is also at record levels with sales of new units rising to about 10,200 last year alone. Asian manufacturers including Japan’s Toyota and Isuzu brands, and Chinese Foton, are already assembling several models of their vehicles in Kenya.

President Kenyatta said the decision by Volkswagen to re-start the assembly of cars in Kenya was proof of the success of the four initiatives of his government to transform the country.

The areas of focus include investments in infrastructure including rail, roads and energy. “These are being welcomed by major investors such as Volkswagen who realise that Kenya is now a more competitive investment destination, and are responding by pursuing opportunities here.

The second area of focus is the reforming of the regulatory and business environment under the Ease of Doing Business Programme. The third area the government has put emphasis on is to grow effective linkages between foreign direct investment and local enterprises.

“Whenever I travel out of Kenya, it is always with an eye to making concrete steps to increase investment by showing the world the huge opportunities available here at home,” said the President.

The Head of State said the hosting of major conferences in the country, has also allowed a critical mass of global investors to see what Kenya has to offer. The President said the fourth area the Government has invested in is the improvement of human resources competitiveness. He said attracting world-class companies like Volkswagen provides a lure and anchor to other similar investors.

“When I came to office, I knew that Kenya needed to become a strong bridge for investment, ideas and regional stability if we are to transform into a wealthy middle class economy,” said the President. Volkswagen South Africa CEO Thomas Schafer said his company is excited to be back in Kenya.

“We were in Kenya in the 1960s and 70’s and resuming operations here is part of our Africa strategy,” he said.

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