VW to launch ride hailing in Rwanda as part of Africa expansion

Thu Dec 22, 2016 10:29am EST
 
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By Aaron Maasho and Clement Uwiringiyimana

NAIROBI/KIGALI (Reuters) - Volkswagen (VOWG_p.DE: Quote) is to start producing cars in Kenya and Rwanda and start a ride-hailing service in Kigali, as the German carmaker expands pay-per-use transportation business models in markets where rival Uber [UBER.UL] has not gained traction.

Emerging markets with poor transportation links have become a key battleground for establishing new mobility services, with Uber competing with newer rivals like Ola, backed by Japan's Softbank (9984.T: Quote), and China's Didi Chuxing.

Volkswagen, which is developing electric vehicles and new services as it tries to put its diesel emissions scandal behind it, said on Thursday it had signed a memorandum of understanding in Kigali, the Rwandan capital.

"Volkswagen wants to strengthen its presence in emerging markets. That is why Africa ranks high on our agenda," said Volkswagen brand chief Herbert Diess.

Rwanda is seen as a good market because competition is less intense. Uber operates in several African countries, including Kenya where it launched in early 2015 and now faces local rivalry.

Volkswagen expanded into ride-hailing in May, when it invested $300 million in Gett, a firm which seeks to outmanoeuvre Uber by refusing to apply "surge" pricing at peak traffic times.

The German company also said it would look at using electric versions of the VW Golf in the Rwandan mobility services business.

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The logo of Volkswagen company is seen on a car on an assembly line at the Volkswagen car factory in Palmela, Portugal, December 9, 2016.   REUTERS/Rafael Marchante