Volkswagen wants a promising return to Algeria

German auto giant Volkswagen is considering a return to the Algerian market after several years of absence. A high-level delegation from the manufacturer is expected next February to explore industrial implantation possibilities, marking a potential turning point for the country's auto industry.

VW Autowest Stand - Oran 2018

Algeria, which has initiated ambitious reforms to revive its automotive sector, now offers a more attractive framework for foreign investors. Volkswagen, which had stopped its activities in Algeria in 2021, seems interested in these changes. The group's withdrawal came in a context of crisis, marked by the conviction of the head of its former local partner, Sovac, and by the end of the advantages linked to the CKD/SKD assembly system.

SOVAC factory in Relizane - Algeria

Since then, Algerian authorities have recovered key infrastructure, such as the Relizane plant, formerly operated by Volkswagen. These initiatives aim to create a strong local industry, involving dependence on imports and boosting the economy.

The visit of the Volkswagen delegation to Algeria will aim to assess local industrial and subcontracting capacities. According to Rachid Bakhchi, president of the Bourse de sous-traitance et de partenariat pour l’ouest algérien, the representatives of the German manufacturer will study the existing infrastructure and the reforms put in place to encourage foreign investment.

Volkswagen could also explore the possibilities offered by new component production plants, such as batteries and other spare parts. These units are being developed to support car manufacturers present in Algeria, including Fiat, which inaugurated a plant in Oran in December 2023.

Volkswagen’s potential return comes at a time when other international manufacturers are showing interest in the Algerian market. The Geely group recently visited Algeria, and negotiations are underway regarding the possible revival of the former Kia plant in Batna. South Korean manufacturer Hyundai has also expressed interest in local production.

The Ministry of Industry confirmed that it had received 36 application files for the manufacture of vehicles. The objective is to develop a real mechanical industry based on a significant integration rate, while continuing to supply the local market through the importation of vehicles while waiting for the development of local production.