The Covid-19 pandemic has had a swift and severe impact on the globally integrated automotive industry.

Reported symptoms include a disruption in car-parts exports, factory interruptions across continents as well as closure of assembly plants.

Similarly, transport in Rwanda has deeply been curtailed by the pandemic, leading to massive operational losses. The big question remains; will local transport companies be able to withstand the impending impact of the Covid-19 outbreak?

To get a pulse about this and more, The New Times’ Edwin Ashimwe spoke to Serge Kamuhinda, CEO of Volkswagen Mobility Solutions Rwanda, and Levy Ouso, the firm’s General Manager of the retail market.

Excerpts:

Two years ago, Volkswagen Rwanda launched its operations in the country with an aim to set up a plant to assemble cars locally and also roll out a mobility solution. How has the journey been so far?

Two years down the road, the objective of Volkswagen Rwanda remains the same. We want to change mobility by allowing as much as possible people to move with new cars in an affordable manner.

In the last two years, we have added new products to allow different segments of the population to move. There is a taxi, there is a car rental, there is an airport shuttle and there are corporate fleet services.

Statistically, we have seven models for mobility, and another five for the retail market.

This allows us to service customers, who don’t necessarily want to buy a new car or who can’t afford to do so.

Based on the retail market point of view, has there been any significant increase in demand on the local market?

From the vehicle retail part of view, we have really grown leaps and bounds. 2019 and 2020, you can clearly see there is a big jump of almost 200 per cent in terms of vehicle demand since we started.

We can say that the market has really received well the Volkswagen vehicles and we are pushing to make sure that we meet the demand so that we satisfy all our customers.

So against our expectation, we are happy with what is on ground because the demand is there. As it stands, the best-selling model is Volkswagen Terramont among the private customers and Volkswagen Amarok in institutions.

Vehicle assembly is dependent on the vehicle demand. So this year, we have had a very good demand. We are looking at assembling 400 vehicles against our target of 1000. This shows that we are slowly meeting our target.

Last year, there was a launch of electric vehicles introduced by a partnership between Volkswagen and Siemens. How far has this pilot project gone?

As it stands, we have 20 electric cars and one charging station. There is another one under construction at the Kigali Convention Centre. We are planning three more in order to make five by the end of this year.

However, we are waiting for a government policy on electric vehicles to be able to expand.

Two years ago, one of the challenges predicted during the launch was the lack of ideal credit terms by financial institutions to allow flexible credit terms for potential buyers. To address this, there were plans to engage local financial institutions to ease car financing terms. What is the current progress?

So far we have partnerships with various local financial institutions. Actually, we have a working relationship with most of the banks.

So that if a customer wants to buy a vehicle and they don’t have 100 percent of the funds with them, we connect them to the bank, and then they get the necessary financial assistance. This one has been very instrumental to ensure that we put more vehicles on the road.

Almost 70 per cent of our private individual customers or SME’s purchase the vehicle through vehicle finance.

Of course the government is still our biggest customer followed by SMES under co-operates and then individuals.

SMEs and individuals are the ones who go for this vehicle finance loan.

We have not reached the desired situation, but we want to do our best by putting up facilities that can give confidence to the financial sector.

Has the impact of the coronavirus outbreak on the global transport sector reflected the same on your transport business?

In the aspect of mobility, being in a transport sector and when movements are restricted of course it affects your company.

We spent close to two months without working. And we still had fixed costs including car insurance, loans among others that still needed to be catered for.

We are also affected by the fact that we had put a lot of effort into the MICE segment, and we have seen of course conferences going down.

For mobility usually we operate 24/7 like two shifts at least. So now we are operating at one shift. So you can imagine how it has affected us.

Usually we are able to put like three drivers on one car for the whole day but now we have less movements especially if you look at the fact that we still only operate at 50 percent of home-office and there is still no leisure.

But we have been able to continue working in the limits of the Covid-19 restrictions. I can say that now things are picking up. Even though we have a few challenges like logistics.

We are optimistic that things are looking up and we shall recover and things will go back to normal very soon.

So it is a big problem for us, as it is for anybody else. And we are trying to cope with it. In terms of progress it is true that we have gone down completely, but we are coming up slowly. Every two weeks the situation changes.

In terms of recovery, is there a specific time frame where you are confident that revenues will begin to shoot up, as it was before the pandemic?

Now with the ease of restrictions, we are seeing businesses coming up slowly and I would say, the silver lining of this crisis to us has been that we used it to learn more about our business.

Therefore, if the current situation remains constant, and there is no further lockdown, and we go to the festive season with more less in similar conditions and we start the year again without no more restrictions, we are hopeful that by quarter two next year things will start to go up.

Concerns have emerged that there were price increments especially with the retail service. What informed this development?

It is true. In the retail market we were forced to adjust some prices especially because of the logistics and the exchange rate.

It is actually a minimal adjustment in terms of price. Statistically, it could be maybe 1%.

We have tried to absorb most of the costs, because we know that if you increase the price you will definitely reduce the demand. So it’s a balance. You have to maintain.

The biggest advantage we had is that during Covid-19 lockdown we already had a stock that was on transit so we managed to survive.

But the new stock that is coming is the one that has a harder slight price increase.

Going forward, are there any big developments in the pipeline?

From the side of mobility, there are products we want to launch. We want to launch a service where people can get a car that is parked at a designated area, drive themselves and drop the car at another designated area.

Another major thing in the pipeline is to increase our presence with electric mobility.

Early next year we are introducing new models on the market to further meet the demand depending on the purchasing power.

This will boost the current pool of opportunities in terms of drivers, people working in the assembly as well as app developers.