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VW targets African roadblocks with ride-hailing business

Video Credit: Reuters Studio - Duration: 02:21s - Published
VW targets African roadblocks with ride-hailing business

VW targets African roadblocks with ride-hailing business

German automaker Volkswagen is testing out a new business model in Rwanda as it looks to gain a greater foothold in the African market.

Serena Chaudhry reports.

Kigali-based entrepreneur Jean-Jacques Koffi is a regular customer of 'Move'.

The ride-hailing business Volkswagen is banking on to grow its business in Africa.

The German carmaker launched the 50-million-dollar project last December.

Rwanda is its testing ground.

So far, the ride-service has 23,000 registered users in the capital.

Although only 2,200 of them are active users.

It's a fairly modest uptake in a city of 850,000 people.

Koffi, originally from Ivory Coast, uses the app-based service twice a day during the week.

He says it's brought his transport costs down significantly - to around 65 to 85 dollars per month, from 130 dollars.

(SOUNDBITE) (English) VOLKSWAGEN RWANDA CHIEF EXECUTIVE OFFICER, MICHAELLA RUGWIZANGOGA, SAYING: "It's really about the customer of the future, you know.

Today, the millenials, you have a new range of customer, who do not want to have the burden of taking care of an item.

They want be able to drive in the car, but they don't want to worry about insurance, maintenance, fueling of the car etcetera.

They want an on demand, just in time, product." But it's not going to be an easy sell.

Most Kigali residents use existing, cheaper public transport like motor taxis and buses.

Others drive themselves.

And industry experts are divided on the merits of the plan.

Questioning whether VW can compete with the likes of Uber and Bolt, both already established in major African cities, but yet to turn profits.

(SOUNDBITE) (Kinyarwanda) TAXI DRIVER, WELLARS NIZEYIMANA, SAYING: "What is obvious is that when it comes to transport here, 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." VW wants to give the business model a two-year test run before assessing it.

The ride-hailing cars are assembled at its new 20-million-dollar plant in Kigali.

VW plans to sell the cars onto the second-hand market at a more affordable rate after a year or two of service.

It's hopeful that combining all its businesses -- new car sales, ride-hailing, car-sharing, used car sales, parts and service -- will make its investment in Rwanda worthwhile.




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