French car-manufacturer Renault plans to build a new factory in Algeria, pushing for rapid expansion on the African continent, as French President Francois Hollande embarks on a visit to the North African country.
Renault will sign an agreement for the construction of the factory with the Algerian state on Wednesday – with the state to hold 51 per cent of the installation, while 49 per cent will be owned by the French manufacturer.
This comes as President Hollande begins a trip to Algeria which will celebrate 50 years of collaboration between the two countries, with the President hoping to focus on the future expressing wishes of friendly relations going forward.
With completion of the factory billed for 2014, it is intended that once operational the factory – which is to be located at Oran – will have an annual output of 25,000 units, which it will eventually ramp up to a maximum capacity of 75,000 units.
Cars assembled at the factory will be based on the Renault Symbol model, a second generation model of the Logan series.
As Renault sees its European sales decline rapidly, it is focusing on expanding outside the European market; hence the push for a stable foot-hold on the African continent.
With Renault accounting for one quarter of cars sold in Algeria – the manufacturer having sold 111,000 units in Algeria in the first 11 months of this year – its prospects for success in the country are substantial, and Algeria may prove an appropriate starting block for the company’s African expansion. Estimates suggest that at its best, the Algerian market sees 450,000 vehicle sales per year.
With rivals Citroen and PSA Peugeot also performing well on the Algerian market, Renault may clinch a lead against the other producers by opening a factory on the ground, given that this should enable Renault to cut the production and by extension retail costs of its vehicles.
In further African endeavours, in conjunction with car manufacturer Nissan Motor, Renault is currently developing a recently launched $ 1.3 billion factory in the Moroccan port town of Tangier, with a view to selling vehicles back to Europe.