Fiat Algeria Accelerates to Leave Renault Behind
In November 2022, Fiat kicked off the construction of its new assembly plant in the Tafraoui Special Economic Zone (#SEZ) in Oran, Algeria. The new plant was officially inaugurated on 11 December 2023. The Ceremony was graced by Algerian Minister of Industry Ali Aoun and Italian Vice-Minister of Production Carlos Tavares.
Stellantis, which owns the Fiat brand, invested EUR 200 million to build the new plant which occupies a land area of 40 hectares in Oran. The factory has a capacity of assembling up to 90,000 cars annually. Initially, the plant has recruited some 300 people, with the headcount expected to rise up to 2,000 by 2026.
The assembly line will process Semi Knocked Down (SKD) and will graduate to Complete Knocked Down (CKD) kits eventually. At the beginning, the factory will output mostly Fiat 500 Hybrid and Fiat Doblo models.
More importantly perhaps, Stellantis plans to foster the local automotive ecosystem in Algeria. By 2026, Fiat Algeria hopes to grab at least 35% of the regional automotive market. At the same time, Algerian government has set a minimum threshold of 30% Local Value Addition (#LVA) to be reached gradually in the coming few years.
In 2014, French car maker Renault had set up an assembly plant in Algeria. The move was warmly welcomed and widely plebiscited; Renault soon controlled 53% of the local market by 2019. However, the Algerian government requested more local value addition (#LVA) as opposed to just assembly. Thus, it introduced a EUR 550 million cap on the imports of car parts to encourage for local content.
Unfortunately, Renault did not to play along amidst allegations of corruption. In 2017, the ‘Fake Factory Scandal’ broke out with video widely shared showing workers simply screwing bolts on imported Complete Built-Up (CBU) vehicles.
“The Fiat Algeria project holds a historical symbolic value which reflects the excellent relations between Algeria and Italy. Through close collaboration, we hope to make this project a reference model in terms of integration and complementarity. At the moment, we are conducting a study which will open new vistas that go well beyond the initial plan.”
Algerian Minister of Industry Ali Aoun
After many rounds of talks, Renault Algeria finally announced plans to reopen its plant in early December 2023. The move was perceived as another breakthrough since Algeria ambitions to become a vehicle production powerhouse. The Algerian government is determined to gradually build up the vehicle production ecosystem and associated subcontracting network in order to reap greater gains for its economy.
Fiat CEO Olivier Francois recalled that Fiat is one of the five oldest car brands in the world and was founded in 1899. Since its inception, its mission has not changed: Fiat proposes smart and affordable vehicles for each segment of the market. The flagship Fiat 500 Hybrid is such model that is both aesthetically-pleasing and environmentally friendly for the discerning customer.