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Automaker Volkswagen has set a target of 2000 cars a year for its Rwandan factory. The company’s head of South African operations Tom Schaefer disclosed this in an interview with Bloomberg.

We are expecting to start with at least 2,000 cars in 2018 alone, but I would love to get to 10,000 cars

Production at the Rwandan plant will begin in June, with several models including the Polo, Passat and Terramont.  The company is also considering expanding Ethiopia, Ghana and Tanzania as part of its long-term plans.

Forecast for Nigeria

For its Nigerian market, the company expects to assemble about a 100 cars this year. Volkswagen sold just 40 units last year. Automobile sales took a sharp hit in the last two years due to the recession and depreciation of the Naira which led to a sharp increase in cost prices of cars, especially brand new.

Why Nigeria is playing a smaller role

One would expect that Volkswagen would be more bullish on Nigeria due to its much larger population (over 160 million compared to Rwanda’s 11 million). The East African country, however, fares better on a macroeconomic level.

Real GDP growth for Rwanda is put at 8.2% in 2018 compared to Nigeria’s forecast growth of 2.1%. Real GDP growth is GDP adjusted for inflation. Higher growth means more people are likely to purchase cars.

Volkswagen was founded on the 28th of May 1937 by the German Labour Front. Fondly known as VW, it is the flagship brand of the Volkswagen Group one of the biggest automobile firms by sales in the world. Revenues for the 2017 financial year hit a record high of $264 billion.

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via onome.ohwovoriole@nairametrics.com

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