Car: Will Renault leave Algeria?

#Algeria : The future of Renault Algeria, which has stalled for two years, is sharply rising today. With only 5,208 cars produced in 2021, its plant in the country is far from planned output and its outlook is clouded by the authorities’ divisive industrial policies.

If the Algerian new car market a few years ago was the second largest on the African continent after South Africa, generating enthusiasm among global manufacturers, then the lack of an automotive ecosystem, changing industrial policies and a suffocating business environment do not offer manufacturers visibility. Today, Algeria’s car assembly sector has failed, reduced to imports of car kits and pre-assembled cars that lacked only wheels.

And today the whole sector has practically stopped. In slow motion, dotted lines spell out the future of Renault Production Algeria, the French manufacturer’s assembly plant in the country.

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Not without reason, in recent years, instead of increasing, the production of the site located in Oran and where 4 models are mounted – Dacia Logan 2, Renault Symbol 2, Dacia Sandero 2 and Renault Clio 4 – is decreasing. After producing 19,419 vehicles in 2015 in its first year, production soared to 42,036 vehicles in 2016, 60,646 vehicles in 2017 and 72,615 vehicles in 2018, approaching the target of 75,000 vehicles per year. However, this exponential growth came to a sudden halt from 2019, when production fell to 60,012 units, then to 754 vehicles installed in 2020, and then rose to 5,208 units in 2021.

This drop is mainly due to the industrial policy adopted, in particular the blocking of imports of SKD/CKD kits by the authorities. The decision that led to the cessation of the production of assembly units of cars in Algeria at the beginning of 2020. And even if car assembly has resumed at the Renault site, production is indeed slowing down. In addition, Inovev stressed that in 2021 it saw the transfer of Dacia Logan production from the Oran plant to the Tangier plant in Morocco.

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The latter is a successful model of the Renault Group and has an assembly capacity of 350,000 units per year. Moreover, in February 2020, Algerian President Abdelmajid Tebboun, in an interview with the French daily Le Figaroexpressed dissatisfaction, stressing that “the Renault plant here has nothing to do with the plant in Morocco”, before adding: “How do you create jobs when there is no integration or outsourcing?”.

In August 2020, after halting operations for 6 months and on the brink, Renault Algeria announced a massive voluntary layoff plan affecting 800 of its 1,200 employees due to lack of information to continue or withdraw from its assembly activities. caused by the suspension of imports of CKD/SKD kits intended for car assembly. At the time, many observers raised concerns about the shutdown of production at the Oran assembly plant.

And the future doesn’t look brighter. However, according to the firm Inovev, “the forecasts for the period 2022-2030 are very uncertain and there is no certainty that Renault will keep this plant.”

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One of the main reasons is that the Algerian authorities, assessing the level of local integration as low, demanded relatively high local content compared to the existing automotive ecosystem in the country. In December 2021, Prime Minister Aymeneh Benabderrahman made it clear that any Algerian car assembly candidate must build a strong ecosystem before starting operations, with a commitment to reach a 35% integration level within a deadline (maximum 3 years).

With such a policy of decreeing, instead of building a viable model, as neighboring Morocco has done for decades, the Algerian authorities do not understand that it is impossible to achieve a high rate of integration in the automotive sector without a developed ecosystem with suppliers, equipment manufacturers. and subcontractors. For example, Renault Tangier now has over 300 subcontractors, original equipment manufacturers and suppliers built around the project. This has allowed this division to post a level of integration that currently exceeds 60%. What is missing in Algeria, where assembly units do not bring local added value, installing only imported car kits.

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As such, Inovev hypothesized that Renault could sell its Algerian plant as the latter is “not at all up to the manufacturer’s goals as it no longer manages to get close to its target of 75,000 vehicles per year based on the response.” to local demand, which suffered at the time due to the cessation of car imports.”

However, the French manufacturer has ruled out for now the closure of its plant in Algiers. “The situation has been going on for some time. Indeed, assembly volumes are always low, but we have by no means stated that we are going to leave Algeria, which remains an important sales market for Renault, ”the group explained, quoted by the Largus website. For Renault, if car assembly in Algeria is not important, the local new market remains very important, the second on the continent until 2016.

Recall that the Renault Production Algeria plant is the result of a partnership between Renault (49%), the National Industrial Vehicle Company -SNVI- (34%) and the National Investment Fund (17%).

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