Volkswagen Returns to Nigeria, Set to Establish Assembly Plant

Like bees attracted to honey, more foreign automobile manufacturing companies have been racing down to Nigeria, Africa’s largest economy, since the establishment of the New Automotive Policy, designed to foster increased local production and cheaper vehicles for local commuters.
More than two decades after its forced departure global automobile manufacturer, Volkswagen Group, is back on the automobile scene in Nigeria, partnering with Dubai based conglomerate Stallion Group to establish a vehicle assembly plant in Nigeria.
Prior to the birth of indigenous car companies in Nigeria, Volkswagen was one of the only two car assembly companies that competed in the Nigerian market. It unfortunately jumped ship when there was a collapse of its joint venture with the Nigerian government.
In a bid to promote investments in affordable made-in-Nigeria vehicles, engender a drastic reduction in the prices of brand new locally made vehicles and restrict the importation of fairly used vehicles, the country announced the implementation of a new automotive policy late last year. Since then, there’s been as rightly expected, a tremendous growth in the country’s previously moribund automobile industry.
The existence of this policy has brought about the emergence of a few indigenous automobile manufacturing companies, the expansion of already established automobile companies and re – emergence of previously existing companies as in the case of Volkswagen.
Peugeot Automobile Nigeria (PAN) Limited, announced in May that it intended to recommence operations in it assembly plant in Kaduna, Northern Nigeria.
That same month saw the partnership of car maker Foton and Kewalram Chanrai Group, a global diversified conglomerate with interest in automobile, agribusiness and textile, which will establish an automobile assembling plant to produce Foton range of Vehicles in Lagos, Nigeria’s commercial capital.
In July, indigenous vehicle producer, Innoson Motors, announced the launch of its locally manufactured cars in the market the following month of August. Stallion Group also announced the roll out of its first ever made-in-Nigeria Hyundai vehicles.
On the implementation of the policy, the country’s National Automotive Council (NAC) revealed in September that 21 Auto companies have signed commitments with technical partners to set up local assembly operations.
According to some automakers, the implementation of the nation’s new auto policy also caused a 20 percent drop in vehicle importation in the first six months of 2014.
Being the third-largest automaker in the world after GM and Toyota , this would be the first time Volkswagen localizes production in Africa, outside of South Africa. And its partnership with Stallion will birth the local assembling of prime Volkswagen brands in Nigeria.
Initially, the new auto policy generated mixed reactions from analysts and industry stakeholders with some arguing that the implementation is hasty, though others were quick to assert that it was a noble vision and a significant milestone in the history of the country’s evolving automotive industry.
Today, the winning argument is clearly the latter as the implementation of the new policy has yielded significant positives. And only bodes well for the future of any industry once plagued with over-inflated prices and zero local production.

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