Volkswagen has announced plans to significantly expand its footprint in Africa, positioning the continent as a key growth driver amid mounting pressure from Chinese electric vehicle manufacturers and stagnating demand in Europe.
The German automaker is betting on Africa’s rising middle class and untapped automotive potential to fuel its future.
In a major strategic shift, Volkswagen is preparing to open a production hub in Egypt, adding to its existing operations in South Africa, Kenya, Ghana, and Rwanda.
The new facility will be located in October City, an industrial zone backed by the Egyptian government through its Automotive Industry Development Program (AIDP).
Martina Biene, CEO of Volkswagen Group Africa, unveiled the plan earlier this month, stating, “Africa is the last automotive frontier.
We are committed to building sustainable partnerships on the continent that support local economies and meet the mobility needs of a growing population.”
The Egyptian plant is part of a broader ambition to establish five production centers across Africa over the next 15 years.
Volkswagen aims to use Egypt’s strategic location and economic ties with both the Middle East and Africa to expand regional distribution and streamline its supply chain.
The push into Africa comes as the group grapples with sluggish sales in Europe. In 2024, Volkswagen reported a 30.6% drop in net profit and only 0.7% revenue growth.
With European markets increasingly saturated and Chinese electric vehicles dominating the competition, the German carmaker is looking further afield.
Africa currently accounts for just 1.27% of global automotive sales, but analysts project the market could hit $42 billion by 2027, fueled by rapid urbanization, population growth, and a rising middle class. However, the road ahead is not without challenges.
The continent still faces low levels of industrialization, limited access to skilled labor, and a market dominated by second-hand imports.
Volkswagen’s initial strategy will focus on semi-knocked-down (SKD) kit assembly, gradually moving toward full-scale local production depending on the development of a viable supplier base.
By staking its future on Africa, Volkswagen is placing a long-term bet on one of the world’s most dynamic, yet complex, emerging markets—one that could ultimately redefine the global automotive map.
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