Industry Ministry Sets New Terms To Break Car Prices In Algeria

Industry and Mines Ministry is preparing to review the contents of the book of conditions that is regulating the installation, assembly and manufacturing of cars locally, two years after it was approved in March 2014, after recording gaps in activity and production chaos.

This was reflected in the statements of the Prime Minister, Abdelmalek Sallal, starting from the tripartite meeting on last March,6 in Annaba (eastern Algeria), When he spoke about the absence of a clear industrial vision for some projects, then he said, on Wednesday, during a press conference, that it was held on the occasion of the visit of the French Prime Minister, Bernard Kazneuve, when he said, that “Signing the project of Peugeot plant, will be preceded by a re-evaluation of the status of the automotive industry in Algeria”.
According to sources from the Industry Sector, the review of the book of conditions is strongly presented today to tighten the supervision of the local manufacturing and installation of cars, after the entry of four factories into service, taking into account the Volkswagen plant in Ghelizane (western Algeria), which will produce the first car by next June, and the factories of Oran Renault, Hyundai and Mercedes in Tiaret, as the most important thing to be included in the new procedures, which are aimed primarily at increasing the rate of integration and breaking the price of cars in the national market, is to reclassify the concessions according to the percentage of integration.
According to the same source, the plant, which will ensure an integration of 0 to 10%, will not have the same factory privileges which range from 10 to 40% of integration, in addition to the mandatory production of some spare parts locally, and thinking about export from the beginning of 2019.
“The production of cars in Algeria is still a new activity that is not subject to the necessary regulation”, said an economist, Abderrahman Mabtoul.
“Development of installation plants comes in a difficult international context, that is characterized by the control of 8 leading marks of global production, while every factory in Algeria, in order to achieve profitability, must ensure at least 100,000 to 150,000 units of production, if a high integration rate is achieved, as dictated by the Algerian authorities”.
Mebtoul said in a statement to Echorouk, that these producers benefit from fiscal privileges and reductions in duties and taxes, in return for a low integration rate that would negatively affect the trade balance by virtue of the import of all parts of the car from abroad, which would necessitate reviewing the concessions that are granted to factories, according to the percentage of integration that is guaranteed by each factory.
Otherwise, the production costs of these vehicles would exceed $ 5 billion, which is the same value of cars import by 2019, and the entry of all factories into service.
Industry Minister, Abdessalam Bouchouareb, has already admitted the shortcomings of the mechanical industry, as he still believes in the cradle.
“It is natural that the car manufacturing activity will have some problems at its beginning, but make sure we’ll achieve the dream of the Algerian car”, he asserted.