Volkswagen AG (VW) plans to start assembling cars in Nigeria as early as next year with Stallion Group, according to people familiar with the matter.

According to Bloomberg, the world’s second-largest automaker approved the project for small-scale final assembly because of tax rules that encourage local manufacturing, said sources, who asked not to be named before an official announcement.

A spokesman for VW declined to comment. Stallion Group didn’t respond to messages seeking comment.

An assembly in Nigeria would mark Wolfsburg, Germany-based Volkswagen’s second return to Nigeria.

In the 1970s, the company set up a multi-billion naira assembly plant, Volkswagen of Nigeria Limited (VON), in Ojo, Lagos State, along with the federal government as equity partner.

It later pulled out when new car sales fell and Nigerian consumers turned to cheaper second-hand cars from Europe and the US in the 1990s, leaving the assembly plant moribund for years until the federal government sold its shares to Stallion Group under the privatisation programme a few years ago.

Since the plant’s acquisition, Stallion has focused on assembling buses and trucks from the VON facility.

VW’s other African manufacturing facilities comprise a car factory in Uitenhage, outside Port Elizabeth, where it produces the Polo small car, while the MAN commercial-vehicle unit has production locations in Olifantsfontain, near Johannesburg, and Pinetown, outside Durban. VW operates 107 factories globally.

Closely held Stallion has inaugurated a vehicle-assembly plant in Lagos and acts as distributor in the country for carmakers including VW, Nissan Motor Co., Hyundai Motor Co. and Porsche.


Source: ThisDay