Algeria buckles up for homegrown auto drive

Employees work at a car factory in Oran, Algeria. (Reuters file photo)
Updated 12 February 2017

Algeria buckles up for homegrown auto drive

ALGIERS: Once one of Africa’s biggest car buyers, Algeria is embarking on an ambitious program aimed at replacing hundreds of thousands of foreign imports with domestically produced models to keep drivers on the road.
Facing up to a sharp drop in the price of oil — its main revenue source — the North African nation has launched a “new economic model” which seeks to reduce reliance on crude sales.
One of the ways it hopes to achieve this is by developing its domestic automotive industry, which has been given incentives to produce more models after the government radically slashed imports.
As fears grow over US President Donald Trump’s impact on global free trade, Algeria’s move toward homegrown manufacturing is a possible sign of protectionism in the country.
Algeria in 2014 was Africa’s second-largest car market in terms of sales, with more than 400,000 vehicles imported annually, but last year it cut import licenses by half.
As a result only 83,000 units were brought in, representing around $1 billion worth of sales — a sharp fall from the $7.6 billion Algeria spent on foreign cars in 2012, Ministry of Commerce figures show.
According to economist Abdelatif Rebah, Algeria’s reliance on foreign cars had become “unsustainable and dangerous for our external balance.”
“In 15 years, Algeria imported more than 4 million vehicles for close to $25 billion, not counting the cost of importing spare parts,” he told AFP.
According to the national statistics office, vehicle imports doubled between 1995 and 2015, as the economy and population grew.
Now, heartened by a similar domestic production drive in neighboring Morocco — which has a Renault plant in Tangiers producing 200,000 models a year — Algeria is eyeing homegrown car manufacturing.
The French motor giant opened a multi-million-euro plant in Paris’s former colony in 2014, with an eventual yearly output set to hit 75,000 vehicles.
In November, Volkswagen signed an agreement with its Algerian sales partner for the construction of a vehicle assembly plant in Relizane, 320 kilometers (200 miles) southwest of the capital Algiers.
The plant will produce several models, including the Volkswagen Golf, SEAT Ibiza and Skoda Octavia as well as the Caddy.
Algeria’s Industry Ministry says it has another dozen such projects in the planning, but experts have expressed doubts over quality assurance.
“Due to decades of deindustrialization... to benefit imports, the level of technological development in our country cannot currently ensure a sufficient level of quality sub-contracting,” Rebah said.
He noted that opting to assemble cars from imported parts often ends up producing a more expensive final product than simply importing finished models.
Although the percentage of car parts manufactured locally is currently negligible, the government has plans to increase that proportion to 40-50 percent within five years.
It also plans to produce 500,000 units per year by 2019 — a rate some analysts say will barely keep up with domestic demand, let alone helping to boost export stock.
Car industry expert Reda Amrani said Algeria had an “immediate” need for 600,000 private cars and another 100,000 industrial vehicles.
“Within two years of production starting at these factories, 20 to 30 percent needs to be destined for export,” he said.


US President Trump does not want to do business with China’s Huawei

Updated 19 August 2019

US President Trump does not want to do business with China’s Huawei

  • US Commerce Department expected to extend a reprieve that permits Huawei to buy supplies from US companies to service its customers

WASHINGTON: US President Donald Trump on Sunday said he did not want the United States to do business with China’s Huawei even as the administration weighs whether to extend a grace period for the company.
Reuters and other media outlets reported on Friday that the US Commerce Department is expected to extend a reprieve given to Huawei Technologies Co. Ltd. that permits the Chinese firm to buy supplies from US companies so that it can service existing customers.
The “temporary general license” will be extended for Huawei for 90 days, Reuters reported, citing two sources familiar with the situation.
On Sunday, Trump told reporters before boarding Air Force One in New Jersey that he did not want to do business with Huawei for national security reasons.
He said there were small parts of Huawei’s business that could be exempted from a broader ban, but that it would be “very complicated.” He did not say whether his administration would extend the “temporary general license.”
Speaking earlier on Sunday, National Economic Council director Larry Kudlow said the Commerce department would extend the Huawei licensing process for three months as a gesture of “good faith” amid broader trade negotiations with China.
“We’re giving a break to our own companies for three months,” Kudlow said on NBC’s “Meet the Press.”