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Volkswagen considering entering Ethiopia

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Addis Ababa, September 12, 2018 (FBC) – Volkswagen (VW) is considering a component assembly plant in Ethiopia, in addition to the two recently announced assembly plants in Ghana and Nigeria, according to The New Times.

VW spokesperson Andile Dlamini said last week the company was exploring expansion into Ethiopia “and component assembly is the initial business we are looking at. Vehicle assembly is also under consideration in the long term.”

Establishment of the assembly plants could be initial steps towards building manufacturing capacity on the continent.

Dlamini said setting up a full plant was complex and costly, requiring an annual volume of at least 100,000 units to be viable.

“At this stage there is no country in sub-Saharan Africa with this size of a new car market. It will take time to develop this,” Dlamini said.

He said it was common in the industry to start with small semi-knocked-down assembly facilities until the markets grew to justify manufacturing. “This is how Volkswagen commenced its operation in China 30 years ago. Today Volkswagen manufactures over 6 million cars a year in China,” he said.

Dlamini said VW would continue to explore opportunities “as and when they present themselves. After having signed the MOUs in Ghana and Nigeria … the next country we are in discussion with is Ethiopia to explore potential opportunities going forward. This is more around component supply than vehicle assembly.”