The venture which will be jointly accomplished with the importer DT Dobie will be Volkswagen’s third production line in Africa – the two others being in Nigeria and South Africa.
Volkswagen, which did not disclose the size of its investment in the Kenyan venture, said it was looking to produce up to 5,000 units of its popular Polo Vivo model annually beginning next year.
“We are taking the successful Polo Vivo from South Africa to Kenya to leverage the enormous growth potential of the African automobile market and participate in its positive development,” The Volkswagen South Africa chief executive Thomas Schäfer said in a statement.
Volkswagen is returning to Kenya after 39 years, having stopped local assembly of vans, microbuses and the famed VW Kombi in 1977.
Mr Schäfer said that the world’s biggest automaker by numbers believed Kenya has the capability to develop a “very big fully-fledged” motor vehicle industry.
The proposed centre will at first focus on the needs of the Volkswagen production team, but it will later provide basic training to give young people general industrial skills as a means to create employment opportunities in the country.
Volkswagen will join other top carmakers already assembling their vehicles in Kenya, including Mitsubishi, Toyota, Nissan and Isuzu.
Kenya’s car market is dominated by second-hand imports from Japan and Volkswagen will most likely face tough competition from the importers.
Official statistics show that the number of vehicles assembled in Kenya between January and April was down 31 percent year-on-year to 2,258 vehicles.
KVM attributed the drop to tough economic conditions for buyers, including high cost of loans and cuts in government expenditure.