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Volkswagen SA to start vehicle assembly in Ghana

Its Africa growth strategy is gaining momentum.

Volkswagen South Africa (VWSA) will start semi-knocked down (SKD) assembly in Ghana in November this year, giving its expansion into Africa additional momentum.

Thomas Schaefer, chair and MD of VWSA, said the group has registered a company in Ghana and will finalise all the details for a joint venture with Universal Motors, its long-term partner in Accra, in the next four weeks.

This follows VWSA signing a memorandum of understanding (MoU) with the Ghanaian government in September last year to establish a vehicle assembly facility in the country and assess the feasibility of introducing a modern mobility concept. Ghana will be the fourth new assembly plant VWSA has established in Africa.

The vehicle manufacturer already has operational assembly plants in Nigeria, Rwanda and Kenya and is involved in discussions with the Ethiopian government after signing a MoU with that government earlier this year on collaborating and delivering a joint vision for the establishment of a motor industry in the country.

The establishment of these assembly plants followed Schaefer in March 2017 taking over responsibility for developing and networking 49 African states that are part of a new sub-Saharan Africa region established by the German-based original equipment manufacturer (OEM).

Regionalisation

The establishment of the fourth region is in line with the company’s regionalisation strategy for the Volkswagen brand.

Schaefer said the new facility will start with the assembly of the Tiguan, Teramont and Passat and then probably go to the assembly of Polos.

He said the group is also considering assembling some Brazilian products in Ghana, including the Saveiro half-ton bakkie.

Schaefer said the current vehicle market in Ghana is not a reference for future volumes because the automotive policy the Ghanaian government had put in place will effectively rapidly phase out used car importation over the next three years.

“If you can convert all that used car volume into new vehicles, we think we can immediately go to 5 000 or 10 000 units a year in the midterm.

“It depends on whether the Ghanaian government will follow through exactly with what they are saying,” he said.

Schaefer said the company is setting up the initial phased SKD plant with an annual capacity of 5 000 units but plans to ramp this up to an annual capacity of 20 000 to 30 000 units soon.

Crucial step

The signing by the Ghanaian government of an automotive industrial policy about 10 days ago was crucial in Volkswagen proceeding with its assembly operation plans in teh country.

Schaefer said the Ghanaian automotive industrial policy was launched in Accra by the country’s minister of trade and industry on August 14 and approved by the government’s cabinet the next day.

“So there was great engagement and consultation with the OEMs. Most of the OEMs were present at the launch and there was great interest. BMW was there and Toyota, Nissan, Hyundai and Renault.

“We also had Dave Coffey there from Naacam [National Association of Automotive Component and Allied Manufacturers] to look into the supplier industry side,” he said.

Schaefer added that there was also great support from former South African trade and industry minister Alec Erwin, who had championed this initiative and for South Africa to work with Ghana on a compatible automotive policy.

Erwin is now a director of strategic advisory and investment holding company Ubu. 

Schaefer, who also chairs the African Association of Automotive Manufacturers, has been a vocal critic of those who view the establishment of an automotive industry in Africa as a risk to SA’s automotive industry.

He said last year that SA could say goodbye to its motor industry in the next 10 years if it was unable to create a joint African market for the country’s automotive companies.

“Africa is South Africa’s only growth opportunity,” he said when VWSA launched its integrated mobility solution in Rwanda. “If production remains at about 600 000 cars a year in South Africa, we are never going to be sustainable. We need to grow production to a million or 1.5 million cars a year.”

Schaefer said Volkswagen plans to play a leading role in the development of a strong automotive industry in Africa.

He said this would result in vehicle manufacturers not just having a market of 50 million people in SA but 600 million people on the continent, which could lead to the creation of an automotive cluster.

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