Algeria: Newly-Imported Cars Entering Revamped Market

After more than six months of waiting, the new vehicles with double zero numbers have started entering the national market, as the car dealerships have managed as from the beginning of last week to receive part of the vehicle-quotas allowed by the Ministries of Trade and Industry and Mines as part of the newly-introduced import licensing system.

Among the latter which have already retrieved a slice of their fixed quotas, we cite the “Sovak” dealership which is the official distributor of German-made “Volskwagen” cars, as well as some French car dealerships and contrary to what was expected, the prices of these newly-imported vehicles have risen by 20 percent in comparison with the recent past.

The former head and now member of the National Association of car dealers accredited in Algeria, Mohamed Bairi confirmed in a statement to “Echorouk” the beginning of the entry into the national market of newly-imported vehicles, while stressing that prices rose significantly totaling up to 20 percent for vehicles registered during the year 2016.

He added that the rest of the expected batch of vehicles  will enter the market gradually in the coming days, including “Iveco” trucks, as ordered by the “Eval” dealership,  while recalling that the overall number of imported vehicles allowed by the relevant authorities for the 2016 was set at 83 thousand units.

The implementation of the import licenses of vehicles has completely destabilized the vehicle market in Algeria. Shortages, narrowing choices disappearance of many models, higher prices, uncertainty in the job market: nothing has been spared to a sector that had experienced the euphoria in 2012, before witnessing a steep decline since then.

The implementation of these import licenses – issued for 40 dealers to a maximum quota of 15,000 vehicles each – was long and laborious.

The licensing system has been in fact a legal and business puzzle. The process was further complicated by the car dealers which have become a lobby with their imports garnering around ten billion dollars in 2012.

The government decided to introduce the licensing system to curb imports that have reached an unbearable level for the country’s capacity. It became the first chapter of imports, far ahead of medicines and cereals.

The current Trade Minister, Bakhti Belaïb, inherited this thorny file from his predecessor, and he dealt with all the necessary slowness, to scale down imports. “It is as if the government wanted to see the first half of 2016 devoid of import of vehicles,” said one observer of the Algerian economy.

The effects are not immediate. Vehicle inventories have gradually fallen to melt completely at some dealers. The choice of models has narrowed considerably. Delivery times have lengthened, while many dealers do not take more orders on some models.

Sales in second hand resumed: customers prefer to buy by paying a little more, a vehicle available immediately rather than waiting for weeks or even months, for a new vehicle.

It should also be noted that higher vehicles’ prices were sparked by the steep depreciation of the dinar

Vehicle prices have also soared. The increase was helped by the steady depreciation of the dinar, resulting in vehicle price hikes of 25 to 35%. 

The second hand market, popular, suffered also the consequences of this situation: a vehicle purchased in 2014 for 1.2 million dinars was sold in April for 1.4 million dinars, after riding for two years!

For the government, however, the result is mixed on a strict budget plan. Certainly, imports have halved compared to 2015 and by four compared to 2012, the year of all records (560,000 imported vehicles), but the tax and customs revenues have dropped alarmingly.

It will take time to see if the risk was worth it: the government hopes, indeed, that such restrictions will encourage the launch of new vehicle assembly projects that will clear the way for the birth of a genuine automobile industry in Algeria.