VW test-runs new business model in Africa

In Rwanda, German car manufacturer VW has begun a new business model hoping to gain a greater foothold in Africa.

The $50 million project is providing car-sharing and ride-hailing as solutions to enhance mobility.

“Today you have new range of customers who don’t want to have the burden of taking care of item, they want be able to drive in the car but they don’t want to worry about insurance, maintenance, fuelling the car etc, they want on demand just in time”, said Volkswagen Rwanda CEO, Michaella Rugwizangoga

So far, the ride-service has 23,000 registered users in Kigali. Although only 2,200 of them are active users.

“It was 120K ($130) I used to pay monthly before using Move. But then right now, sometimes I can be from 60 to 80 thousands Rwandan francs ($65-85) so you see the difference is huge”, Kigali resident, Jean Jacques Koffi said.

But can VW withstand the likes of Uber and Bolt who are already in major African cities?

‘‘I don’t think that VW will be able to take over the market, because it will not be able to take all the people who need to move around, even if it was the only company available available on the market. Because there are too many people who still prefer to take the traditional taxis”, taxi driver, Wellars Nizeyimana said.

VW wants to give the business model a 2 year test run before assessment. The cars are assembled at its new $20 million plant in the Rwandan capital.

Reuters