October 22, 2019 / 1:13 PM / 25 days ago

VW weighs expanding ride-hailing business to Ghana

JOHANNESBURG (Reuters) - Volkswagen (VOWG_p.DE) will decide early next year whether to roll out its new ride-hailing business in Ghana, where the German automaker will soon begin assembling cars, the head of the company’s African division said.

FILE PHOTO: A new logo of German carmaker Volkswagen at the VW headquarters in Wolfsburg, Germany September 9, 2019. REUTERS/Fabian Bimmer/File Photo

Volkswagen (VW) launched its app-driven “Move” service last December, using Rwanda’s capital Kigali as the initial testing ground for a business model it hopes will eventually help it to crack Africa’s largely untapped new car market.

“In January, there’s going to be the decision on how we get the mobility company set up (in Ghana), which services would make sense. Is it the car-sharing or the ride-hailing? But the data we now have from Rwanda is super valuable,” Thomas Schaefer told reporters late on Monday.

Global carmakers including VW, Nissan, Toyota, Honda and Peugeot are seeking to develop markets in Africa, where incomes and consumer aspirations are rising.

But low new passenger car sales - partly the result of a lack of financing and cheaper imported used cars - have made it difficult to justify investing in local manufacturing and assembly.

VW will begin assembling its Tiguan, Teramont, and Passat models by the end of this year at a plant in Ghana that will initially have the capacity to produce 5,000 cars per year.

Ghana’s government approved a new automotive policy in August aimed at encouraging carmakers to invest in local production.

“It ticks all the boxes: reduction and eventual phase-out of used cars, improvement of petrol and diesel quality, introduction of preferential financing. All the critical topics have been addressed,” Schaefer said.

Despite industry efforts to expand in sub-Saharan Africa, South Africa - the continent’s most developed economy - remains the only market of scale for new car sales.

VW’s South African facilities are on track to produce some 162,000 cars and another 100,000 engines this year - a record for the company in South Africa - Schaefer said. About two-thirds of those vehicles are destined for the export market.

Reporting by Joe Bavier; Editing by Mark Potter

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