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Despite a first failure, Algeria intends to revive its automotive industry

In Algeria, there are hardly any vehicles to buy, whether new or second-hand, indicates the 360 ​​website. So much so that some old “tired” vehicles are said to be selling at new prices. If the finding is perhaps a little excessive, the fact remains that the automotive sector in Algeria is totally damaged. It is the result of a catastrophic policy combining protectionism, lack of industrial strategy, and corruption.

At the start, there is an observation. In 2014, a boom year, Algeria became the leading importer of new vehicles on the African continent, with 418,000 units. A year later, the bill is just over three billion dollars. Unbearable in the eyes of the authorities, obsessed with the country’s balance of payments, when the oil rent shows its limits.

In 2016, Algiers therefore decided to impose quotas. Forty dealers have to share a strict volume of 83,000 imported vehicles. At the same time, the country, like its Moroccan neighbor, wants to launch a local construction industry. We are looking for foreign partners and the oligarchs are flocking to the bargain.

Global-based manufacturers are arriving: Renault, Volkswagen, Kia are responding to the call. But all this is done without any upstream strategy. We set up automobile factories, but there are no subcontractors – equipment manufacturers in particular present in Algeria. The factories then become assembly sites for car kits from abroad.

As an individual assembles a piece of furniture in pieces, here we assemble a car. One way for these globalized manufacturers to penetrate the Algerian market. In some cases, to justify the “made in Algeria”, you just have to mount the wheels on the vehicle, says the local press.

The record in terms of added value is appalling. The import of kits reached three billion dollars for 100,000 units in 2018. Worse, because of the tax advantages granted to local manufacturers, the business becomes a financial pit.

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In 2019, the government decided to reduce the import of these car kits, which had the consequences of drying up the assembly lines. For lack of products, factories are idling. The coup de grace will be struck with the arrival of Aldelmadjib Tebboune to power. Not only are the imports of kits completely prohibited, but manufacturers must integrate 30% of parts made in Algeria.

However, the situation has remained the same. Equipment manufacturers are still absent from the country. This obligation will mark the end of the car construction embryo. The Korean Kia (1,200 employees) and the German Volkswagen (700 employees) let go of the case and go out of business. Renault remains, but its factory is shut down.

The huge politico-industrial purge launched when Abdelaziz Bouteflika left has not helped. Two former Prime Ministers (Ahmed Ouyahia and Abdelmalek Sellal), two former ministers of Industry and businessmen such as Mahieddine Tahkout (Huyndai) or Mourad Oulmi (Volkswagen) have joined the prison. The trials revealed clear misappropriation of public aid and tax benefits, while the specifications were rarely respected. But if justice is passed, the automotive industry has been beheaded.

Today, when the factories have been shut down for more than a year, the Algerian government would like to restart the machine. But the local industrialists, through the voice of Sami Agli, the president of the employers, calm the enthusiasm. We must first create a subcontracting industry via the spare part sector, advocates the employers. When it is mature, it can then supply the builders downstream.

In fact, what the Moroccan neighbor has done should be done. Build a solid base before becoming a major player in the automotive industry in Africa.

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