Algeria tries to regain ground in the car industry

Algeria wants to put all its machinery to work to recover the ground it has been losing in recent years. The growth of the automotive industry in its Moroccan rival has left Algiers in a very bad position and it is now looking for growth in this sector. To this end, it has opened a new Fiat factory in the western city of Oran as a sign of the opportunities Algeria can offer foreign investors.

This is an attempt made with great haste. The CEO of Stellantis - Fiat's parent company - Carlos Tavarez himself assured that this assembly plant "has been completed in a record time of one year, with a production capacity of 90,000 cars per year". For the time being, however, the plant's production capacity will not exceed 50,000 cars during the first years of operation.

The opening of the new plant was definitively certified at the end of last year thanks to the agreement reached between the Algerian Ministry of Industry and Fiat. This project, which will create up to 1,200 new jobs, will involve an investment of 200 million euros. The Algerian Minister of Industry, Ali Aoun, explained the increase in the level of production that the assembly plant will have, assuring that "it will start producing 50,000 cars a year, reaching 80,000 cars in 2026".

It should not be overlooked that this new boost to the automotive sector by Algerian industry is nothing more than an attempt to reverse a decision taken by its own government. President Abdelmajdid Tebboune assured that factories should be closed because "they were content just to put on wheels", in exchange for large tax concessions, in addition to ceasing to import a significant volume of vehicles, affecting companies such as Nissan, which announced in 2019 the establishment of a factory in Algeria at a cost of around 160 million euros.

The new Algerian strategy is a response to very poor data provided by consumer associations. In recent years, the local market has been experiencing a severe shortage of both new and used cars, as well as high prices for the few that are available on the market. In fact, it is precisely these prices that have annoyed foreign companies operating in Algeria, blaming the continuous changes in laws and regulations, as well as complaining about inequalities in their application.

Another reason that has kept investors away is the risk companies take in setting up in Algiers. Lengthy bureaucratic processes pose major obstacles, in addition to the lack of guarantees in terms of judicial rights. These are some of the factors that have favoured the growth of the industry in neighbouring countries such as Tunisia and, especially, Morocco.

Now, Algeria aims to leave behind these barriers that prevented investors from entrusting its industry to Algerian territory and to be able to compete with the rivals that have gained much of the ground in recent years. And this is no small task, as Morocco has made great progress in this period and has managed to bring together a series of investors that have led it to become the leader in the automotive sector in the North African and Maghreb region.