Volkswagen AG, the second-largest automaker in the world, is said to plan the start of car assembly in Africa’s Nigeria as early as 2015 together with Dubai-based conglomerate Stallion Group.
According to the sources that talked to Bloomberg under condition of anonymity because the deal has not been made public yet, the German automaker is treating this as a small-scale production project, encouraged by the tax breaks that come with local manufacturing. Wolfsburg, Germany-based Volkswagen’s decision to begin assembly in Nigeria would be the first time the carmaker localizes production on the continent outside South Africa. While the group has 107 plants worldwide, the VW AG’s only facilities in Africa are a passenger car plant in Uitenhage, outside Port Elizabeth, South Africa – where it builds the Polo small car and a MAN commercial-vehicle division’s factory and production facilities in Olifantsfontain, near Johannesburg, and Pinetown, outside Durban.
The Dubai-based conglomerate Stallion Group has started building a vehicle-assembly facility in Lagos, Nigeria and already acts as the local distributor for automakers such as Volkswagen, Japan’s Nissan and South Korea’s Hyundai. Volkswagen is currently in the midst of a deep makeover, as the core passenger brand has seen declining revenues and sales lately.