Volkswagen makes a return to Kenya in new JV deal

The government has entered into a joint venture agreement with German car manufacture Volkswagen (VW) to produce cars locally.

Through the JV, VW will produce its cars at the Kenya Vehicle Manufactures (KVM) plant in Thika initially producing the Vivo.

President Uhuru Kenyatta says the partnership will fast track the country’s ambitions of becoming a manufacturing hub while providing jobs.

“This I believe decent jobs for Kenyans and their families. It means not only joining consumption of imported goods but their production here at home so that their hard earned money can uplift more Kenyans,” President Kenyatta said.

This will be the second time Volkswagen will be manufacturing cars locally having exited the market in the late 70’s.

Through the partnership, Volkswagen plans to produce the VW Vivo model from December, before scaling up production of other passenger cars.

The German car manufacture currently has four plants in South Africa producing a variety of passenger and commercial vehicles. .

Volkswagen South Africa Chief Executive Thomas Schafer hailed the partnership with the government adding that the local production facility would serve as a launch pad to boost sales in the east African region.

“We believe that Kenya has the potential to develop a very big fully fledged automotive industry and today is the first step in this direction that we want to set with our passenger cars,” Mr Schafer said.

Details of the joint venture remain scanty but it is believed the government is set to give lucrative incentives to the car manufacture to set up its local operations.

The government in 2015 introduced a tax incentive for local car manufactures guaranteeing at least 40 percent of the annual car lease contracts would go to locally assembled cars.

DT Dobie has held the franchise sale agreement for Volkswagen in the country.

Volkswagen is the world’s third largest car manufacturer.

Kenya Vehicle Manufactures was set up in 1976 and has to date produced 60,000 units. The vehicle assembler is jointly owned by the government, CMC and the CFAO Group which also has a stake in DT Dobie.