Awaits automotive policy act before making investment decision
Global automaker Volkswagen is looking for partners to cut costs and bring its affordable cars to Africa, where it sees huge growth potential, the managing director and chairwoman of Volkswagen Group Africa said.
In an interview with The Reporter on Friday, Martina Biene said alongside Volkswagen’s effort to link consumers with banks, authorities must also play a role to carry out the strategy.
“If you want the automotive industry to flourish in the country, there must be a business environment that make it attractive to foreign industries,” Biene said. “We’re trying to onboard banking partners, but governments also have to facilitate an automotive policy.”
VW is in talks with banks to provide loans at competitive rates and help lower prices for African consumers. But Biene says governments must also craft policies that attract automakers. She commended Ethiopia for embracing a progressive ban on used cars.
But the government’s upcoming Automotive policy must offer incentives for export, as the domestic market alone is insufficient, according to Biene. Volkswagen says installing a factory is not feasible unless Ethiopia’s annual consumption is at least 100,000 new vehicles.
Although Biene expressed willingness to accommodate Ethiopia’s automotive market, she listed requirements for Volkswagen to install assembly factory there. In 2019, Volkswagen Group signed a memorandum of understanding with the Ethiopian Investment Commission (EIC) to establish a facility.
Biene says Volkswagen has launched a pilot mobility program in Rwanda, including ride-hailing, car sharing for hotels and airports. Customers pay per use, not for ownership. After two years, the cars were replaced and prices dropped, she said.
Africa’s auto market is led by South Africa, where over half of the continent’s 1.1 million new vehicles are sold yearly.
Since Ethiopia has no automotive policy, Volkswagen is unsure of the industry environment, Biene says.
Ethiopia has drafted a policy pending lawmaker’s approval. Volkswagen’s decision to build an Ethiopian assembly plant depends on the final policy and competition in other countries, Biene added.