Volkswagen Set To Make A Comeback At KVM Thika.

Motor dealer DT Dobie is set to start assembling Volkswagen (VW) vehicles including saloon cars and light trucks at the Thika-based Kenya Vehicle Manufacturers plant.  The joint project will be Volkswagen’s third production facility in Africa – alongside the South African factory and a local production facility in Nigeria.

The company, which took over the VW franchise from CMC Holdings, has been importing the German vehicles fully built from markets like South Africa.

Volkswagen said the Thika-based plant will start to assemble its most popular models, beginning with the Volkswagen Vivo – a small sedan car.  It is planned to build up to 5000 units of the Polo Vivo per year at the plant operated by Kenya Vehicle Manufacturers (KVM) produce the first car by December.

Volkswagen South Africa CEO Thomas Schafer said the German multinational will later this year start assembling some of its models at KVM, having stopped local assembly in the 1970s.

  

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,” Mr Schafer said in a statement.

“The Volkswagen Group is excited to be here and we will start operations immediately.” Mr Schafer signed an agreement with President Uhuru Kenyatta to launch VW’s local assembly at KVM where the government has a 35% stake.

DT Dobie is a 32.5% shareholder of the Thika assembly plant while CMC Holdings’ stake stands at 32.5%.

Among the VW models to be assembled are light trucks and Vivo, a passenger car which will be the first to be put together locally.

“I am happy to welcome back the Volkswagen Group, currently the largest car manufacturer in the world, back to Kenya,” President Uhuru Kenyatta said in a statement.

  

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.

He added that 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.

“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. 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.”

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.

The German automaker used to operate in Kenya until 1977. It used to assemble Volkswagen vans, microbuses and the famous Kombi. Local assembly is largely boosted by the exemption of vehicle parts headed for assembly plants from the 25% import duty levied on fully-built cars, resulting in a price advantage.

Dealers say the recent move by the government to scrap a 20 % excise tax on locally assembled vehicles could see an increase in local production.