BusinessSPECIAL REPORT: Revealed: Why Volkswagen Pulled Out Of Nigeria

SPECIAL REPORT: Revealed: Why Volkswagen Pulled Out Of Nigeria

  • West Africa’s Largest Market Shut out of VW’s Ambitious Plans for SSA
  • German Automaker Lists Conditions for Return

As Nigerians continue to wonder why Volkswagen, the leading German automaker, pulled out its operations from the country despite the popularity of the vehicle brand in West Africa’s largest market, THEWILL can authoritatively reveal that three main factors were responsible for the decision that has unfortunately shut Nigeria out of Volkswagen’s ambitious plans for Sub-Saharan Africa.

The refusal of the immediate past President, Muhammadu Buhari, to assent to the Nigerian Automotive Industry Development Plan Bill throughout his eight-year tenure of two terms, despite the fact that the Bill had been passed by the National Assembly since 2013, is one of the reasons for Volkswagen’s withdrawal from Nigeria.

THEWILL recalls that Buhari refused assent to the Bill twice during his tenure thus disappointing major stakeholders, despite their efforts and huge investments, coupled with the immense opportunities the passage of the Bill into law would have brought into the country.

Another reason for the painful decision to pull out of Nigeria is the prevalence of dirty and low quality fuel in the local market as the German automaker insists that its modern vehicles cannot run efficiently on dirty fuel available in the Nigerian market.

The activities of catalytic converters’ thieves who vandalise new vehicles, including Volkswagen, from the ports of entry by stealing the catalytic converters, thus making the vehicles to emit dangerous gases into the atmosphere, is the third reason as Volkswagen maintains that it cannot, in any way, offer warranty on such vandalised vehicles that would further compound the company’s after-sales maintenance efforts.

Volkswagen made the revelations during its maiden Sub-Saharan Africa (SSA) Media Event, which was held recently in South the leading global automaker insists that though Nigeria is of great importance to its interest in Africa, it would only consider a come-back if the first two factors are addressed and quickly, too.

“We’ll return to Nigeria soon. But the government must give us the Automotive Policy (by assenting to the Bill) first and more cleaner fuels,” the chairperson and Managing Director, Volkswagen Group South Africa (VWSA), Martina Biene, replied bluntly when THEWILL took her up on the Nigerian pull-out during an encounter at the company’s head office in Kariega, Port Elizabeth on the sidelines of the media event that was attended by delegates from the African markets.

The Head , Group Communications, VWSA, Andile Dlamini, also expressed optimism of Volkswagen’s return to Nigeria.

“We’re surely coming back very soon, that I can assure you,” Dlamini told THEWILL. “We were in Nigeria during the visit of the German Chancellor to Nigeria and talks are still going on with officials of the Nigerian Government.”

Speaking earlier at the National Sales Operations (NSO) headquarters of VWSA in Sandton, Johannesburg, the Director, Sales and Marketing, Thomas Milz, who also heads the NSO, lamented the Nigerian situation, saying a country which imports about 600,000 used vehicles annually cannot be said to be serious about local manufacturing. He corroborated the reasons given by the Managing Director for the company’s decision to pull out of Nigeria, even as he confirmed to THEWILL that the Volkswagen dealership contract with Stallion Motors Nigeria had been discontinued.

“We were in Nigeria and had fruitful discussions with Jelani Aliyu, the Director General of the National Automotive Design and Development Commission (NADDC) . There is a lot of interest from the stakeholders and the AAAM (Association of African Automotive Manufacturers). We are still interested in the Nigerian market and our partner is waiting,” Milz said without disclosing the identity of the new partner.

Also lamenting the Nigerian situation, pointing at the regular changes in import/excise duty as well as what he described as the ”horrible fuel quality,” the Sales Operations Manager, Vinesh Ramchander, said “auto policy is key to our auto business in Africa.” He stressed that the situation currently in Nigeria ”offers no advantage to local assembly as the auto policy bill that was tabled in 2013 was never fully implemented.”

On the values and benefits that Volkswagen is bringing to its markets and partner-countries in sub saharan Africa, which Nigeria is missing out currently, the National Sales Director, Milz, said: “We are German-based and a global player. We are guided by the Volkswagen spirit. We love the brand. We are not producing appliances but mobility equipment. We bring the German culture and heritage of perfectionism into other countries.”

Milz disclosed further: ”Volkswagen sells 6 million vehicles globally every year with only a fraction of that in Africa and we have to insist on high fuel quality. Cleaner fuels will allow us to offer a good combination of products.

“The auto policy developed for Nigeria by KPMG is one of the best but it was not implemented.The fuel quality was a disaster for us . We have plans for representation in Nigeria and we’ve identified a partner. We are waiting for the auto policy and the right fuel quality. With a new refinery in place (Dangote), we hope the fuel quality will improve.”

Milz added that the NSO strategy for sub saharan Africa is anchored on seven pillars to achieve mobility and technology through auto connectivity. He listed the strategy, tagged ”WE//2025/ @THE NSO STRATEGY,” to include Mobility Connectivity, Digital Customer Experience, Loyalty, Brand, Sub Saharan Africa, Dealer Network and People.

With headquarters in Wolfsburg, Germany, the Volkswagen Group has 121 assembly plants globally, four of which are located in Africa, (South Africa, Kenya, Rwanda and Ghana) under the oversight of VWSA. As market demand keeps shifting towards the AOO segment due to the difficult economic conditions, VWSA is working on regaining the market leadership position through robust initiatives.

Sadly, despite her huge potential, Nigeria, at the moment, does not rank among the first five leading markets for Volkswagen in Africa. The five leading markets are South Africa, where VWSA provides 4,000 direct and 50,000 indirect jobs as the single largest employer; Kenya, where it is producing in partnership with CFAO; Cote d’Ivoire; Rwanda and Ghana. Volkswagen is also developing its markets in Angola, Senegal, Mozambique, Mauritius and Zimbabwe.

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