Volkswagen-Kagame Deal Shows Why The Carmaker Has A Serious Reputation Problem
Open Letter Dr. Herbert Diess, Chairman of the Board of Volkswagen
Dear Dr. Herbert Diess, this letter refers to Volkswagen’s investment in Rwanda. Volkswagen says it has built a US$20 Million assembly plant there. The company further asserts that the Rwandan plant is assembling no less than three models — Polo, Passat and Teramont. These claims are highly problematic. For a carmaker seeking to restore its reputation after it was caught cheating in 2015, calling the US$20 Million investment in Rwanda “an automobile assembly” is dubious. Before dealing with this matter, I first highlight what Volkswagen stated in its 2017 Annual Report with regards to the 2015 scandal:
”We overhauled our code of conduct and our whistleblowing systems…The combination of integrity, compliance, and culture is important and indispensable of the transformation process we are undergoing. We are renewing ourselves from the inside out and are evolving on a daily basis to merit our most important asset — the trust of our customers and stakeholders.
By this statement, Volkswagen is asking the public to trust it again after the 2015 scandal destroyed its reputation. Volkswagen admitted that 500,000 cars it sold in the US were fitted with “defeat devices” designed to fool emissions tests.
For this rigging, Volkswagen incurred around US$30 billion in fines— a figure that included the price of buying back the vehicles sold in the US.
Sadly, Volkswagen is still engaging in dishonest acts. Case in point is its venture in Rwanda, launched on June 27, 2018. It was on that day that Rwanda President Paul Kagame infamously informed the world that Volkswagen is now building cars in Rwanda. This is how Kagame put it:
”Some found it hard to believe that German cars could really be built in Rwanda. Yet today, the first vehicles are rolling off the assembly line.”
This, of course, is a big lie. Kagame is a man who routinely lies and exaggerates his socioeconomic accomplishments. He claims to have transformed Rwanda into the Singapore of Africa . Yet, the World Bank’s 2018 Economic Update shows that nearly 40% of Rwandan children suffer from chronic malnutrition. Britain which is the second largest aid donor to Rwanda reports that ”Rwanda remains one of the poorest countries in the world. Over a third of its population live in poverty.” So when Kagame boasts that German cars are rolling off the assembly line in Rwanda, that is Kagame being Kagame.
Surprisingly, Volkswagen echoed Kagame’s big lie.
One would have expected Volkswagen to launch its comparatively small investment with a modest announcement. Not Volkswagen. Instead, the company boasted that its investment marked ”a new era” in Rwanda. Like Kagame, Volkswagen described its project in Rwanda in self-aggrandizement terms:
Sure enough, Kagame repeated Volkswagen’s “new era” slogan. In his own words, Volkswagen’s assembly plant “undoubtedly represents a new chapter in Rwanda’s journey of economic transformation.”
Dear Dr. Herbert Diess, if I may say so, this is hardly the way to restore your reputation. Even for a small economy such as Rwanda with a GDP of US$8.3 Billion, a US$20 Million investment is hardly as remarkable as you describe it. Worse still, one must ask this question — where in the world can US$20 Million build an automobile assembly plant? Where in the world did you ever see an assembly line with only four workers?
Dr. Diess, as the Chairman of Volkswagen, you know how costly automobile assembly plants are. For example, your Uitenhage assembly plant in South Africa cost R4.5 Billion or US$328 Million in 2015. Volkswagen’s assembly plant in Chattanooga, Tennessee, USA cost US$1 Billion. And now Volkswagen shamelessly abuses people’s intelligence by claiming that it built an assembly line in Rwanda for US$20 Million.
Dr. Herbert Diess, the profile of the top leadership you deployed to run your Rwanda operations also revealed Volkswagen’s duplicity.
Your CEO in Rwanda is Michaella Rugwizangoga who apparently never worked in, let alone led an automobile company. Rugwizangoga was previously employed by President Kagame’s wife, Madam Jeannette Kagame Nyiramongi, in her Imbuto Foundation . Before that, Rugwizangoga worked for the Kagame government in Rwanda Development Board (RDB). This is no means to belittle Rugwizangoga’s accomplishments in the world of work. I am merely pointing out the absurdity of a US$20 Million automobile assembly led by someone who has no knowledge of the industry.
Would a person of such profile be hired to run Volkswagen’s Uitenhage assembly plant in South Africa, or the Chattanooga’s plant in Tennessee, USA, or the Thika plant in Kenya? The answer is obviously no — the three plants are genuine assemblers which require automobile-manufacturing leadership.
Dr. Herbert Diess, in conclusion, I wish to state that, evidently, Volkswagen is not renewing itself in order to merit public trust. Your company cannot be trusted. Here is a carmaker shamelessly aggrandizing a US$20 Million workshop into an automobile assembly plant. Suddenly, attaching tires, bumpers, and exhaust pipes to a vehicle become an assembly process. This scandal is not in the league of the 2015 “emissionsgate” — but it is a disgrace, nonetheless.