Volkswagen Revives Effort To Set Up Vehicle Manufacturing Plant In Sri Lanka

[StarOnline]

Volkswagen revives effort to set up vehicle manufacturing plant in Sri Lanka

Germany’s Volkswagen company has been exploring the possibility of setting up a plant to produce vehicles for export in the past few years but this had not materialised due to unspecified reasons, a statement quoted the German Ambassador in Sri Lanka as saying in Colombo recently.

This was disclosed by German ambassador Jurgen Morhard when he met Deputy Economic Affairs Minister Harsha de Silva on Monday. He told the Minister that Germany looked forward to becoming a friendly partner to Sri Lanka.

The ambassador was quoted in the embassy release as saying though Volkswagen, the second largest car maker in the world, “had strived since 2008 to start up a business to manufacture cars in Sri Lanka for export, it did not succeed for various reasons.”

Mr. de Silva had said the new administration was ready to discuss such projects which will give high paying jobs to workers and raise household income levels. Volkswagen which rose from the ashes of World War II was one of the firms that contributed to the so-called German economic miracle of the country’s social market economy, helping not only people in the country but also those abroad become mobile.

http://www.sundaytimes.lk/150125/business-times/germanys-volkswagen-revives-effort-to-set-up-vehicle-manufacturing-plant-in-sri-lanka-131439.html

[StarOnline]

Volkswagen interested in Sri Lanka export manufacturing plant

Germany's Volkswagen has been trying set up a plant to produce vehicles for export for years but had not succeeded due to unspecified reasons, a statement quoted the German envoy to Colombo as saying.

German ambassador Jergen Morhard who had met deputy economic affairs minister Harsha de Silva Monday had said the country looked forward to becoming a friendly partner to Sri Lanka.

The ambassador was quoted as saying though Volkswagen, the second largest car maker in the world, "had strived since 2008 to start up a business to manufacture cars in Sri Lanka for export, it did not succeed for various reasons."

De Silva had said the new administration was ready to discuss such projects which will give high paying jobs to workers and raise household income levels. The new administration has repeatedly promised investors a transparent regime with no under the counter payments to multiple parties.

Volkswagen which rose from the ashes of World War II was one of the firms that contributed to the so-called German economic miracle of the country's social market economy, helping not only people in the country but also those abroad become mobile. Mobility coming from a car or a motorcycle is an important factor in raising living standards and quality of life of families.

http://www.economynext.com/Volkswagen_interested_in_Sri_Lanka_export_manufacturing_plant-3-806-4.html

Edited February 19, 2015 by StarOnline

[StarOnline]

[maersk]

There's a Volkswagen manufacturing facility in India. Not sure why they want to invest in SL as well.

[aps]

There's a Volkswagen manufacturing facility in India. Not sure why they want to invest in SL as well.

becos most of us by indian cars not Volks

[Crosswind]

Sri Lanka is in a key position in the asia-africa shipping route. So it makes sense if Volkswagen wants to source raw material from Asia (China, Malaysia, India and the likes), put the car together in Sri Lanka and ship it off to Africa. Africa will be the next growth driver in the world anyway. For example, there's only one place a telecom company can set up shop now and expect not to make a loss. That's Africa. So maybe that's the place Volkswagen folks are targeting.

Frankly, this sounds more plausible than the hypercar nonsense and it came from the German ambassador and not one of our local politikkas. So I would personally wish success for this effort more than the hyper car.

[iRage]

Sri Lanka is in a key position in the asia-africa shipping route. So it makes sense if Volkswagen wants to source raw material from Asia (China, Malaysia, India and the likes), put the car together in Sri Lanka and ship it off to Africa. Africa will be the next growth driver in the world anyway. For example, there's only one place a telecom company can set up shop now and expect not to make a loss. That's Africa. So maybe that's the place Volkswagen folks are targeting.

Don't they have a plant in South Africa ? Apart from the Amarok all the other VWs in Tanzania came out of there.

[The Don]

VW has a plant in South Africa, and they have a plant in India.

The only way they will open a plant in Sri Lanka, if the government provides a lot of incentive for them to base themselves here as come of the costs in SL are higher than of India, and India has a much larger domestic market (in which VW is already a big player).

It would be very good for Sri Lanka, if the government imposes a condition (like most countries do) that they partner with a local company in setting up the manufacturing facility. That way the country in general will benefit with transference of technology and manufacturing techniques.

Plus it will be nicer to have cheap VWs for sale in the local market compared to Marutis.

Its a pity we can't persuade a budget car maker like Dacia, because I think they will be a big hit in SL, considering the amount of Viva Elites that was sold in SL (it would have made sense to Perouda to have moved their assembly line to SL if they could ). Dacia makes small cars on a budget on the Renault platform (and the Duster for example is very popular already in India though sold under a Renault badge).

[Crosswind]

There's too much government interference when it comes to doing business in Malaysia. Far more than what happened in the past in Sri Lanka. So there's no way on earth any Malaysian carmaker would open a plant outside their own soil. It's a pity because Proton and Perodua both make good cars. Hicom makes good trucks. But the government interference keeps their innovation and business under too much of control...

Coming back to VW, since a lot of stuff are sourced from other Asian countries, it doesnt make much difference if the assembly happens in SA or in SL. Don't forget that demand predictions, market conditions etc. also matters in these decisions. Maybe its possible that the Aurangabad factory will supply cars to North India and the planned assembly in SL will supply cars to South India. Maybe it would be different models made in these locations (which makes more sense). Personally I feel the government should be very lenient with the first international carmaker to set up shop here. Once the country gets established as a car manufacturing country, they can gradually demand high local value additions, export quotas and stuff like that.

[The Don]

Ha ha I didn't realise the VW factory was in Aurangabad. I've been there Easy to forget you are not in Sri Lanka.

On the North India, South India question, I think South India houses more automotive plants than the north, and this was due to political support. I like many others are interested to know the rational. One thing for certain. Its easier to find English speakers (at least broken English) in Sri Lanka compared to India, and our general education levels are better.

But like you say Government policy, and in this case favourable AND stable Government policy will be the key to attractive investment. A lack of corruption and transparency also helps. For example if VW has to pay off dozens of officials on a regular basis to run an operation (which is likely what they will have to do in Africa) they would not bother and take their business somewhere else.

Also what I hope it will be is ground up manufacture (where the car is manufactured, not just assembled from a kit) or specialist manufacture (such as making a certain component, for example the engine).

[sathyajithj99]

VW has a plant in South Africa, and they have a plant in India.

The only way they will open a plant in Sri Lanka, if the government provides a lot of incentive for them to base themselves here as come of the costs in SL are higher than of India, and India has a much larger domestic market (in which VW is already a big player).

It would be very good for Sri Lanka, if the government imposes a condition (like most countries do) that they partner with a local company in setting up the manufacturing facility. That way the country in general will benefit with transference of technology and manufacturing techniques.

Plus it will be nicer to have cheap VWs for sale in the local market compared to Marutis.

Its a pity we can't persuade a budget car maker like Dacia, because I think they will be a big hit in SL, considering the amount of Viva Elites that was sold in SL (it would have made sense to Perouda to have moved their assembly line to SL if they could ). Dacia makes small cars on a budget on the Renault platform (and the Duster for example is very popular already in India though sold under a Renault badge).(

That's good news.We can use our hard earned money to buy something sensible.(I hope this happens during my lifetime)