French car maker, Renault, has launched a manufacturing plant in Algeria, the continent’s second biggest automotive market for the car maker. The plant, which has the capacity to produce about 25,000 vehicles yearly, will be manufacturing a low cost sedans.
“I think it’s a market that can exceed 500,000 units a year,” Guillaume Josselin, Renault’s sales chief in Algeria, told Automotive Post Europe.
According to the company, a second phase, which will increase production to 75,000 vehicles annually, is under consideration.
Renault’s low cost cars and its presence in emerging markets have helped it come out of a six year slump in European Auto market Industry that ended in 2013.
The plant, located at Oran on the north-western Mediterranean coast of Algeria, is the company’s first plant in the country since it exited the market in 1962.
According to Renault, Algeria is its tenth largest market, where it holds an estimated 25.5 percent market share. In 2013, Renault sold about 425,000 vehicles in Algeria, making it Renault’s second largest automotive markets in Africa. South Africa remains its biggest African market.
Sales in Algeria, as at September 2014, hit 265,000, a 37 percent decrease from its sales recorded last year. Renault however says it is optimistic that sales will remain high. This is because about 3 million vehicles present on the country’s roads are have an average age of 16 years, meaning owners are expected to return to the market to purchase new vehicles.
The French car maker owns 49 percent stake in the plant and has made an initial investment of 50 million euros ($62 million). It has also hired about 350 staff, training them at Renault-Nissan alliance plants around the world.
Renault currently has significant presence in North Africa, with two factories in Morocco. It is keen to further boost sales within the region’s top markets where new car sales are expected to increase to 880,000 units by 2015, according to IHS Automotive.