Volkswagen AG (VOW) plans to start assembling cars in Nigeria as early as next year with Dubai-based conglomerate Stallion Group, according to people familiar with the matter.
The world’s second-largest automaker approved the project for small-scale final assembly because of tax rules that encourage local manufacturing, said the people, who asked not to be named before an official announcement. A spokesman for VW declined to comment. Stallion Group didn’t respond to messages seeking comment.
Assembly in Nigeria would mark Wolfsburg, Germany-based Volkswagen’s first production on the continent outside South Africa. VW’s only other African manufacturing facilities comprise a car factory in Uitenhage, outside Port Elizabeth, where it produces the Polo small car, while the MAN commercial-vehicle unit has production locations in Olifantsfontain, near Johannesburg, and Pinetown, outside Durban. VW operates 107 factories globally.
Closely held Stallion has commissioned a vehicle-assembly plant in Lagos and acts as distributor in the country for carmakers including VW, Nissan Motor Co. (7201) and Hyundai Motor Co. (005380), according to its website.