Before 2014 the only domestic vehicle manufacturer was the state-owned Entreprise Nationale des Vehicules Industriels (SNVI), which was established during colonial times and produces commercial and heavy vehicles. However, in 2014 Renault Algérie Production, a joint venture between SNVI, Fond National d’Investissement and French carmaker Renault, launched an assembly plant near Oran. Initial production capacity was 25,000 vehicles per year, with a capacity to expand production to 75,000. In October 2017 it assembled its 100,000th vehicle. Another assembly line has been completed, with sales due to start in early 2018.
German manufacturer Volkswagen followed in July 2017, inaugurating an assembly plant in Relizane in a joint venture with its Algerian distributor SOVAC. The capacity is 200 vehicles per day, to be increased to 550 in 2018. This launch is reportedly intended to increase Volkswagen’s presence not only in Algeria, but also in Africa generally, by 2025.
Furthermore, the domestic Tahkout Group launched an assembly plant to produce Hyundai vehicles in Tiaret, with a planned capacity of 100,000 vehicles per year by 2020. South Korean carmaker Kia, together with the Global Group, its distributor, also reportedly began building a AD14bn (€116.1m) factory in Djemma in Batna province in April 2017, which will have a 100,000-vehicle-per-year capacity and should be complete in 2021. In April 2017 Abdelmalek Sellal, then-prime minister, also said plans for a Peugeot factory would be finalised by end-2017, and in October 2017 the French carmaker was reportedly confident this would be resolved soon.
The government has also been reviewing applications by Nissan, Saipat and Suzuki, with some delays. In October 2017 the Japanese ambassador to Algeria told media that plans to establish Nissan and Toyota factories could be finalised in 2018. By October 2017 authorities received 36 applications for assembly plants.
General government efforts to incentivise local industrial production, as well as measures to reduce imports of some types of manufactured goods, have caused the sudden spike in such projects (see overview). In 2016 the government introduced licences and quotas for vehicle imports, causing a decline in imports from 417,913 in 2014 to fewer than 100,000 in 2016. The government planned to distribute licences for the import of around 55,000 cars in 2017, but later decided not to grant any for the year. However, individual Algerians can still import cars. In October 2017 local press had conflicting reports as to whether any car import licences would be issued in 2018. Since January 2017 permits to sell new cars have also only been granted to firms with local production facilities.
The government aims for annual production to reach 500,000 units by 2019. While primary output is currently of semi-knocked-down kit assembly, companies operating such plants are expected to reach 15% integration within three years and 40% within five.
Critics argue such targets are far-fetched and that the kit-based assembly model is more expensive than importing finished vehicles (see overview). Indeed, a fully functional car industry cannot emerge overnight. Alexandre Kateb, founder of consultancy firm Competence Finance, told OBG that a profitable ecosystem of manufacturers, spare parts producers and subcontractors was likely to take around 10 years to develop, but that the long-term outlook was positive.
Indeed, such an ecosystem is already developing. In October 2017 the Tahkout Group announced plans to build a motors and spare parts factory in El Bayedh in a joint venture with Tunisia’s Plastic Electromechanic Company. Local firm Saterex is also building a tyre factory in Sétif. Due to open in 2018, this will be the largest facility in Africa, producing 1m car tyres in its first year and expanding to 2m car and truck tyres. In October 2017 Youcef Yousfi, the minister of industry and mining, said the planned re-opening of a petrochemicals and plastics plant in Skikda should facilitate integration by increasing availability of locally produced plastics.
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