Algeria 2017. In four years the market dropped over 75%

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Fiat-Qubo-2017

Algerian Cars Sales kept falling in the 2017, the fourth year in a row, having lost over 75% of volume since the 2013 record. The reduction of over 50% of licences to import has not been balanced by growth of local production.

Algerian economy in 2017 pointed to a modest performance. Although GDP growth in the quarter was 1.4% higher than the same quarter of 2016, up slightly from Q2’s revised 1.3% (previously reported: +1.5% year-on-year), it was low by historical standards.

Growth was propped up by the industrial, construction, agricultural and service sectors, while the hydrocarbon sector—which is suffering from capacity constraints due to lackluster investment—contracted sharply.

Different is the mood inside the automotive industry, the second largest in Africa untill a couple of years ago and then killed by the government project to boost the national production and block the huge cash-out for vehicles import. Nothing wrong in these scopes while the way to achieve these targets has been really naif.

Reducing the licence to import, the government has just reduced heavily the authorization to import vehicles released to OEMs and market dropped down rapidly in the 2016, when at the end just 98.000 licenses were released. For the 2017, the number of licences should have been below the 50.000 officially announced (no certain data released).

Many car makers have accepted the “invitation” to produce locally, but they need time to appropriately set up operation. Following the Renault-Dacia plant, in July 2017 Volkswagen Group started operations to produce several models, like VW Golf, VW Caddy, Seat Ibiza and Skoda Octavia. Hyundai Group is also producing locally and Suzuki is building a new plant.

However, the authorities, following the appointment of Abdelmajid Tabboun as prime minister last May, have adopted a number of measures and are preparing to set up a new book of conditions to frame the installation plants and all new licences to produce with SND system have been blocked.

Indeed, the policy in place have killed the market, penalizing all importers while heavily sustaining the activity of re-assembling vehicles (so, not really produced in Algeria) with higher cost for producer and customer price increased by over the half in 3 years, generating a flow of grey import and penalizing official distributors network. A real disaster!

Indeed the vehicles market fell down from a record of 423.000 sales in the 2013 losing over 75% of volume and landing at 102.066 in the 2017. For the 2018 we forecast a stabilization of volume, while all operators are waiting for new move from government.

At brand-wise, Renault sold 42.831 vehicles (+11.9%) followed by Dacia with 19.091 (-16.9%) and Hyundai with 12.336 sales (+38.6%), all keeping advantages by the competitive advantage to produce locally.

Tables with sales figures

In the tables below we report sales for all Brands, top 10 Manufacturers Group and top 10 Models

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