Rwanda’s war against dumping by foreign countries has been emboldened with the launch of the first car built in Kigali on Wednesday.
German carmaker Volkswagen rolled off a Polo from its new assembly plant at Kigali’s Special Economic Zone.
“Africa does not need to be a dumping ground for secondhand cars or secondhand anything,” President Paul Kagame said at the unveiling ceremony.
“Some found it hard to believe that German cars could really be built in Rwanda. Yet today, the first vehicles are rolling off the assembly line. This facility undoubtedly represents a new chapter, in Rwanda’s journey of economic transformation,” he added.
Analysts predict that the new vehicles market in Africa could increase rapidly with President Kagame, who is also the chairman of the African Union, having joined the campaign to reduce importation of used cars in the continent.
Mr Kagame said that used vehicles are a leading cause of pollution and are also expensive to maintain.
“In the long run you end up paying a higher price anyway. When you can pay a high price for a secondhand, why can’t you pay higher price for something new?” He posed.
The Volkswagen plant in Rwanda is the German carmaker’s fourth operation in Africa after South Africa, Nigeria, Kenya and Algeria.
The Kigali factory will build Polo, Passat, Teramont, Tiguan and Amarok pickup models.
The firm will import knocked-down vehicle parts for assembly.
With an initial investment of $20 million, the plant is expected to roll off 1,000 to 5,000 units annually to serve both the region and global markets.
President Kagame’s anti-used vehicle campaign has been welcomed by manufacturers grappling with low sales of new units in Africa.
Data from the auto industry shows that in Africa’s two largest economies – South Africa and Nigeria – only about 360,000 and 7,000 new cars, respectively, were sold last year. In Kenya, some 12,000 units were sold.
While the new vehicle sale in Rwanda remains low, Volkswagen is optimistic that its Transform 2025+ brand strategy will focus on new up-and-coming markets.
“Although the African automotive market is comparatively small today, the region could develop into an automotive growth market of the future,” said Thomas Schafer, CEO of Volkswagen Group South Africa.
He is optimistic Rwanda could become a blueprint for other African and emerging market countries after rolling out Volkswagen’s community car sharing business model.
For Rwf12,000 ($14) per hour, customers will be able to ride in any of the 550 vehicles the firm will introduce in the Rwandan market in the first phase.
“Rwanda is the ideal market for new mobility solutions because the people are very digitally-minded and tech-savvy. Moreover, demand for mobility is growing and the present offerings can scarcely keep pace with these needs,” said Mr Schafer.