Algerian Vehicles Sales have started the recovery in the 2018 after having lost near 75% in the previous 4 years. The full availability of new vehicles locally produced by Volkswagen Group offered new options to the consumers and the sales grew up 127.300 units (+24.8%) with Seat and Volkswagen booming.
Algerian economy slowed slightly from Q2’s already weak showing in Q3, as oil and gas production contracted at an even sharper pace than in the previous quarter and as service sector growth softened slightly. Nevertheless, higher oil prices in the quarter likely buttressed the government’s coffers in the period.
Sonatrach’s massive investment plan and a new energy law should drive growth this year by stimulating investment. However, a weak non-oil economy and high unemployment leave the country vulnerable to a prolonged downturn in oil prices.
Algerian vehicles market is literally in a chaos, after the sharp reduction of volume (-75% in four years) due to the government decision to reduce sharply the number of licences to import. This decision was criticised by the new Prime Minister, Mr. Abdelmajid Tabboun, appointed in May 2017, which noted as the cost of locally assembled vehicles was widely higher than imported. Indeed, in the country there is not the technological base and knowledge to efficiently produce new cars and Manufacturers are just assembling, with the CKD production system, vehicles and parts build somewhere else, with higher cost of production than usual.
In addition, the range of local made models are very limited and the distributors/dealers have low competition, increasing their margin offering higher price to the final customers. However, no effective actions had been taken by the new prime minister so far.
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. Peugeot will produce since 2019, via a joint venture.
Light Vehicles sales volume had dropped dramatically in recent years from the record established in the 2013 with 423.000 units. Losing over 75% of volume in four years, the market landed to only 102.066 in the 2017, near one-fourth of sales lost in four years!
In the 2018 the market has finally started the recovery, fueled by the start of production and sales of the cars locally produced, mainly by the Volkswagen group and by Seat. The market shown the start of the recovery, up 24.8%, at 127.300.
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At brand-wise, the 2018 market leader was Renault selling 52.321 vehicles (+22.2%) followed by Dacia with 18.616 (-2.5%), Seat with 18.500 (+260.6%) and Volkswagen with 12.203 (206.9%).
After the strong fall of recent years, the Algerian market is expected to have started a recovering and is seen positive for the entire 2019-2025 period of time. The progressive introduction of new vehicles produced locally which will have a price gap over the imported, will continue to expand the customer choice. While economy is not seen booming, however the market actually stands well below the real potential.
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