The Volkswagen Group Wednesday unveiled its first locally assembled passenger vehicle in four decades during the official opening of its production line at the Kenya Vehicle Manufacturing plant in Thika.
The vehicle, VW Polo Vivo, which has been assembled in three months, will retail at Sh1.65 million inclusive of value-added tax.
The group will in its initial phase produce up to 1,000 vehicles per year, a number that will be increased to 5,000 units annually at the assembly.
DT Dobie CEO Zarak Khan said the new Volkswagen Vivo demystifies the thinking that locally assembled vehicles are limited in options with its wide range of standard features including alloy wheels, CD players and other features.
To those who are conscious of maintenance, the vehicle comes with a Sh2,750 a month fee for car service in its three-year warranty.
President Uhuru Kenyatta thanked the VW group for its decision to re-invest in the country terming the re-opening of the production line as the beginning of the country’s industrialisation journey that had stalled in the early 1990s due to an influx in imported goods including motor vehicles.
Volkswagen's engagement with Africa dates back to 1951 when the first beetle rolled off the production line in South Africa which has since then produced and sold more than 3.5 million cars.
In Kenya, the group was about 40 years ago assembling the microbus and Combi vehicles at the Thika vehicle manufacturing plant, whose annual production had risen to 4600 vehicles by 1990, providing direct employment to about 600 Kenyans.
The industry, however, collapsed due to an increased importation of second-hand vehicles. The plant remained with a reduced annual production of less than 150 vehicles annually.
President Kenyatta promised VW total support, which sources some of its materials from Africa, to ensure its success.
The group gets materials including catalytic converters, wheels, wiring harnesses from South Africa, Tunisia, Morocco and Egypt at a cost of about 1.3 million euros annually.
“I want to assure VW that we will reciprocate their trust by continuing with the progressive policies and laws which have made Kenya an attractive destination for foreign investment,” he said.
Volkswagen Brand CEO Dr Herbert Diess said the group wants to strengthen its presence in emerging markets and especially Africa by adopting successful business models suitable to local needs and circumstances.
Mr Diess noted that Kenya’s growing economy offers great business opportunities, excellent training education system and median age of 20 years offers an excellent market potential of about 350,000 passenger cars per year.
Similar projects will be rolled out in Nigeria and Rwanda.
“In Kenya we shall start with assembling the Polo Vivo, the most successful passenger car in Sub-Saharan Africa. It's robust, affordable and has a superb service inclusive of a comprehensive manufacturer’s warranty,” he said.
President Kenyatta noted that Germany and VW group’s decision to offer training to its local employees and community will go a long way in helping youths in the country build capacity for the entire automotive sector as well as other manufacturing sectors.
“Much of our youth have the basic education but lack the technical skills needed to realise the country’s industrialisation policy. As of now, we are giving priority to expanding our vocational and training institutions to bridge the gap towards helping the country realise its industrialisation policy,” said the President.
President Kenyatta said the national and county governments should buy vehicles from the facility to boost its sales.
“With the opening of this facility, I expect to see a lot of VW Government vehicles. I hope the county governments will also buy Volkswagen cars,” President Kenyatta said.
German ambassador Michael Derus said the opening of the German based Volkswagen production line marks a milestone in the beginning of good co-operation relations between Germany and Kenya.
Mr Derus announced that Nairobi will in February 8-10 host the next German Africa Business Summit.
“I am glad that we have timely and before the conference initiated a substantial direct German investment in this country as Volkswagen makes a substantial contribution towards growth of the automotive sector here which is very much keeping with the policies of the German Federal Government,” said the ambassador.