Update: Volkswagen confirms no license for local companies to assemble vehicles

Update :   Volkswagen has further confirmed to Times Online that it has not licensed any Sri Lankan company to assemble cars locally. Spokesperson Katrin Hohmann said: "Again, we’d like to state that the Volkswagen brand is constantly evaluating market opportunities on a worldwide basis. There are no decisions for Volkswagen brand investments in Sri Lanka and, therefore, no agreements with local companies for a production facility."

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There is no involvement of German carmaker Volkswagen AG in the project to set up an assembly plant at Kuliyapitiya in the Kurunegala district, a spokesman for the German Embassy said today.

“SENOK Trade Combine (Pvt) Ltd. and BOI are the parties of the contract signed on 13th August 2015,” said Dr. Michael Dohmen, Deputy Head of Mission, in response to a question from the Sunday Times. “According to our state of knowledge currently there isn’t any involvement of Volkswagen in the project. If you have further questions, I’d recommend you to contact SENOK.”

Dr Dohmen said the Embassy has no knowledge about any other German involvement either. Volkswagen has separately confirmed to a media station that there are ‘‘currently no plans for a Volkswagen brand investment in Sri Lanka“.

Times Online contacted Senok for a comment. A spokesperson said they would get back  with the information required-namely, the brands of vehicles to be assemble at Kulipitiya. A response is still awaited.

It was widely reported that the car assembly plant that was set up by a SENOK company called Western Automobiles on Tuesday would assemble Volkswagen and other European brands for export. It was first announced in early 2015 that Volkswagen, whose local sales agent is SENOK, was exploring the possibility of setting up a factory in Sri Lanka to produce vehicles for export.

Times Online learns, however, that the plan was abandoned after Volkswagen faced troubles abroad over emissions and false advertising. At the time they pulled out, the relevant agreement had already been signed. So SENOK continued with the proposal.

Under the BOI agreement, SENOK had initially pledged to partner with Volkswagen which was to be the investor and technical collaborator. But the name Volkswagen has recently been struck off and replaced simply with “Western European“. A specific investor is no longer mentioned.

The name SENOK has also been changed to Western Automobiles. The company receives a tax holiday for a period of eight years after which it would be liable to pay 15 percent income tax. It has agreed to invest US$ 21.5 million within two years.

The agreement does not include a pledge by Western Automobiles to provide employment to 2,500 people either immediately or over a period of years. There are also no details of the brands of Western European vehicles that would be assembled in Kuliyapitiya.

(NW)