Fiat has launched its first plant in Algeria, in Oran. The installation of this assembly line comes after the country ended its restrictions on vehicle imports last March. 

The new Fiat plant has a capacity of 90,000 cars per year, according to Stellantis, brand owner. The Fiat 500 and Doblò models to be manufactured at the new facility will be imported in SKD (semi-knocked down) form, before being completely put together in Oran. Fiat’s long-term objective is to export CKD (completely knocked down) kits for local assembly from 2026.

The group has invested €200m ($220m) to bring this 32-hectare assembly plant into being. Stellantis wants to make Algeria a regional hub for automotive production and exports. The group has created “500 direct jobs in Algeria in 2023 to reach 2,000 jobs by 2026”.

Tension with Renault

The company plans to develop a local subcontracting network, which will enable it to meet 35% of the region’s automotive production needs by 2026, more than the 30% desired by the government.

Fiat’s arrival comes amid a tense climate between the Algerian authorities and carmakers, notably Renault, which has been operating in the country since 2014. Welcomed at the time with great fanfare, Renault, which held 53% of the market in 2019, saw its expansion ambitions slowed by the introduction of a $600m (around €546m) cap on imports of spare parts. This decision prompted the group to halt production at its Oran site.

The company has since resumed importing and marketing its cars in the country. In early December, it was granted a provisional authorisation to reopen its plant. But Renault is determined to make a stronger comeback in Algeria. In 2024, the group will launch vehicle production, turning its back on imports of SKD and CKD kits.

The ‘fake factories’ scandal

The sector became increasingly strained in 2017 with the release of a video showing some operators assembling vehicles in Algeria by screwing bolts onto cars that were already operational. Following the broadcast of the video, the government suspended imports of new vehicles to encourage groups to set up their entire production chain in Algeria.

This measure ended up plunging the sector into crisis. The insurance association told El Watan newspaper it had lost 450bn dinars ($3.3bn) between 2019 and 2022. This restriction was lifted last March.

With seven million vehicles on the road in 2020, Algeria remains an attractive market for international manufacturers.

Source : The Africa Report

Leave a Reply

Your email address will not be published. Required fields are marked *