#Algeria : The future of Renault Algeria, deadlocked for two years, arises today with acuteness. With production of just 5,208 vehicles in 2021, its factory in the country is far from its production target and its prospects are clouded by the divisive industrial policy of the authorities.
And today, the whole sector is almost at a standstill. Turning in slow motion, the future of Renault Production Algeria, the assembly plant of the French manufacturer in the country, is written in dotted lines.
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For good 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 – declines. After production of 19,419 units in 2015, in its first year, production rose crescendo to 42,036 vehicles in 2016, 60,646 units in 2017 and 72,615 units in 2018, approaching the set target of 75,000 cars per year. However, this exponential increase came to a sudden halt from 2019 with production falling to 60,012 units, then to 754 vehicles fitted in 2020, before rising to 5,208 units in 2021.
This fall is mainly explained by the industrial policy adopted, with in particular the blocking of imports of SKD/CKD kits by the authorities. A decision which led to the cessation of production of car assembly units in Algeria at the start of 2020. And even if car assembly has resumed at the Renault site, production is really slowing down. Moreover, the firm Inovev underlined having observed in 2021 a transfer of production of the Dacia Logan from the Oran factory to that of Tangier 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 Abdelmadjid Tebboune, in an interview with the French daily Le Figaroexpressed his dissatisfaction by emphasizing that “the Renault plant here has nothing to do with the one in Morocco”, before adding: “How to create jobs when there is no has no integration, no outsourcing?”.
In August 2020, after stopping its activity for 6 months and on the edge of the abyss, Renault Algeria announced a massive plan of voluntary departures affecting 800 of its 1,200 employees due to a lack of visibility on the continuation or not of its assembly activity, caused by the suspension of imports of CKD/SKD kits intended for the assembly of vehicles. At that time, many observers had expressed the risk of stopping production at the assembly unit in Oran.
And the future does not look brighter. Still according to the firm Inovev, “the forecasts for the period 2022-2030 are very uncertain and it is not certain that Renault will keep this plant”.
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One of the main causes is that the Algerian authorities, judging the local integration rate low, demanded a relatively high local content compared to the existing automotive ecosystem in the country. In December 2021, Prime Minister Aïmene Benabderrahmane made it clear that any candidate for car assembly in Algeria must set up a solid ecosystem before launching its activities with the obligation to reach an integration rate of 35% within a deadline. 3 years maximum.
With this policy of decreeing, instead of building a viable model as neighboring Morocco has done for decades, the Algerian authorities fail to 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. By way of illustration, Renault Tangier now has more than 300 subcontractors, equipment manufacturers and suppliers established around the project. This has enabled this unit to post an integration rate currently exceeding 60%. Something that is lacking in Algeria, where the assembly units do not bring any local added value by only mounting imported car kits.
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Inovev has thus put forward the hypothesis that Renault could sell its Algerian plant, because the latter “does not at all meet the manufacturer’s objectives since it no longer manages to approach the targeted production level of 75,000 vehicles per year, on the based on a response to local demand which had suffered at the time from the stoppage of car imports”.
However, the French manufacturer has for the moment ruled out any closure of its factory in Algeria. “The situation has been going on for some time. Indeed, the assembled volumes are always low, but in no case have we announced that we are going to leave Algeria, which remains an important market for Renault”, explained the group, quoted by the Largus site. For Renault, if car assembly is not important in Algeria, the local new market, the second on the continent until 2016, remains very important.
Remember that the Renault Production Algeria plant is the result of a partnership between Renault (49%), the National Company of Industrial Vehicles -SNVI- (34%) and the National Investment Fund (17%).