This archive report was first published on 26 September 2019.
Published on September 26, 2019, Volkswagen's Africa boss Thomas Schaefer embarked on a mission to conquer the continent, but he soon realized that a new business model was needed to succeed.
Studies showed that there was little demand for new cars in Africa due to low purchasing power and a lack of financing, making them inaccessible to most people. The competition from used imports also made it difficult for buyers to opt for new cars.
Schaefer placed a $50 million bet on a new business built around ride-hailing and car-sharing, with Rwanda as its laboratory. The German carmaker's project was launched in December 2018 in the capital Kigali, but since then, scant information has been disclosed about its progress.
According to Volkswagen, the app for its 'Move' ride-service now has over 23,000 registered users in Kigali, but only around 2,200 of those are active users. The ride-hailing service averaged 384 rides per day in July, a figure Volkswagen aims to double.
Industry experts are divided on the merits of the plan, with some questioning whether Volkswagen can compete with the likes of Uber and Bolt in Africa or if it should even try. While Volkswagen sees Kigali as an ideal test ground, critics argue that the city is not an accurate gauge of conditions in bigger markets.
Michaella Rugwizangoga, CEO of Volkswagen Mobility Solutions, believes that the company will eventually need around 800 cars on the road in the city for ride-hailing and sharing. Volkswagen plans to introduce its E-Golf electric vehicle into the mobility fleet next year.
For Joseline Iradukunda, a 25-year-old driver who quit her job as a secretary to work for Volkswagen's ride-hailing service, the experience has been rewarding. 'This car works 24/7,' she said proudly, as she picked up a client in the city's beehive-shaped convention centre.
