Due to the fact that Algeria is spending more on importing cars than it’s realizing from crude oil, the North African country is set to cut expenditures by producing local car models. Rather than continue to import popular car models, the country is set to start producing them locally to boost national needs. This becomes more crucial since the country is facing dwindling oil revenues which could not be wasted on importing cars in the face of the country’s economic needs.
Developing the automotive industry to offset dwindling oil sales
Algeria needs a new economic model to offset its declining oil revenues, and this it has chosen to do by boosting local production of car models. This becomes all the more necessary in the light of President Donald Trump’s policies on the US automotive industry, which has global impacts on car consumers worldwide. The Algerian government would rather protect its own economy and boost its growth rather than rely on the whims of the leaders of a foreign country.
The country imported over 400,000 cars annually up till 2014, but in 2015 the government reduced import licenses to stem car importation. The nation spent an average of $7.6 billion annually to import cars up till 2014, but with the new guidelines in place, the country spent about $1 billion in 2015 to import 83,000 cars, Arab News quoted Algeria’s Ministry of Commerce.
Foreign automakers opened up plants in Algeria
Being a former French colony, French automaker Renault set up a car plant in Algeria in 2014 with aims to produce an average of 75,000 cars every year. In October 2016, German automaker Volkswagen also set foot in Algeria to produce Golf, Skoda Octavia, and SEAT Ibiza among other Volkswagen models. Meanwhile, neighboring country Morocco has a similar car plant to boost its economic fortunes in some way.
An Algerian economist, Abdelatif Rebah, said the country could have chosen to assemble cars from imported spare parts, but this would make the produced cars to be costlier than those imported directly. He said it is better for the government to produce its own cars and from there work its way up to the point of even exporting cars to other countries. With Algeria’s growing population and expanding economy, economic experts say the country needs 600,000 cars for immediate use by its peoples and 100,000 industrial vehicles for use by government and companies.