Market Trend and Outlook

Algerian vehicle market in July 2023 booms 104.9% growing for the 3rd month in a row, with new registrations reaching 2,997. YTD figures at 14,243 are up 6.4% from the previous year.

Looking at cumulative data up to July 2023 brand-wise, Dacia ranks in 1st with 3,267 sales (-11.6%), followed by Kia with 2,446 registrations (+38.9%) and Chery with 1,598 units sold (+32.7%).

Seat rises 6 spots into 4th position with 1,328 total sales (+370.9%), in front of Peugeot at 1,138 (+43.1%), Toyota at 731 (+20.6%) and Audi with 530 new vehicle registrations (+35.2%).

BMW rises 3 spots into 8th with 380 sales (+48.4%), followed by Mercedes -up 4 spots- with 363 units sold (+51.9%) and Renault in 10th -down 4 spots- with 351 new registrations (-55.1%).

Looking at specific models the Dacia Sandero maintains leadership despite losing 11.6% in year-on-year sales, followed by the Chery QQ up 11.5%.

Medium-Term Market Trend

The Algerian vehicle market grew from 201,382 in 2010 to 298,043 sales by the end of 2013. In 2014 demand for light vehicles fell substantially for the following 3 years, dropping more than 50% to 99,481 in 2017. The market bounced back in 2018 rising up to 149,858 by the end of 2019.

The Covid-19 restrictions caused the vehicle market in Algeria to collapse 83.1%, down to 25,286 sales, the lowest levels of the previous decade.

In 2021 sales grew up to 30,178. In 2022 demand for light vehicles began to fall again, with the year projected to close around 23k (-22.5%). A combination of factors are behind the current industry struggle: restrictions imposed on light vehicle imports and lack of raw materials world wide, in particular for the production of microchips. Both of these factors have made it more and more expensive to buy a light vehicle in Algeria.

Market Trend and Outlook

Algerian vehicle market in 2022 totals 25,402 sales, a 22.9% loss from the previous year. In December the market fell for the 10th month in a row, with 2,822 new registrations reported (-1.9%).

Looking at cumulative data from 2022 brand-wise, Dacia maintains 1st with 7,085 sales (-39.2%), followed by previous year’s leader Kia with 3,154 registrations (+48.6%) and Hyundai with 2,897 units sold (-22.6%).

Chery rises 1 spot into 4th position with 2,181 total sales (+33.8%), in front of Renault at 1,565 (-74.2%), Peugeot at 1,451 (+31.2%) and Toyota with 1,042 new vehicle registrations (+23.8%).

Audi falls 1 spots into 8th with 841 sales (-21.1%), followed by Volkswagen -up 2 spots- with 769 units sold (+34.0%) and BMW in 10th with 571 new registrations (-16.3%).

Market Trend

The Algerian car market this year reported extreme swings, ranging from a 70% drop in Q1 to a 1859.6% rise in Q2.

The Algerian automotive industry was fighting to recover after the sharp fall reported during the last years, generated by the government strategy to build up local production, banning the vehicles import. The market is now heavily concentrated in those manufacturers which have decided to start up local facilities.

In the last six years, the automotive industry in Algeria has dramatically changed, losing over 70% of volumes, due to the government’s decision to block the vehicles import and push all carmakers willing to sell in the country, to establish local facilities.

While the purpose was not original, the approach led to a shortage of products, and prices jumped in the sky, with the market collapsing from the all-time record of 429,960 light vehicles units hit in 2013, to a minimum peak of 101,979 units sold in 2017. At that point in time, when the first plants have been able to start a growing production, the market approaches the recovery, growing at 127,300 in 2018.

However, in 2019 the market did not hold the recovering trend, registering 153,617 units.

2020 represents however a huge step back, with the market deeply declining hit by the economic crisis generated by the COVID-19 restrictions and by the fall of oil price and export. Sales in 2020 have been 27.894, reporting a decline of 81.8%.

Full-Year sales for 2021 have been 32,851, reporting a 17.8% increase compared to 2020.

Economic Environment

The economic panorama remains bleak amid the dual shock of pandemic-induced restrictions and tumbling oil revenues: Oil output slumped throughout Q2 and into Q3 following the agreement of the latest OPEC+ production cuts, hitting the lowest level since early 2000 in July.

Although output ticked up slightly in August, weak external demand kept production relatively low nonetheless, likely weighing on government finances in Q3. Furthermore, elevated—albeit falling—new Covid-19 cases and continued restrictions on daily life are still hampering domestic activity heading into Q4, while international borders remain closed.

In politics, parliament approved President Tebboune’s draft changes to the constitution in mid-September, setting up a national referendum for 1 November that will take place amid widespread political unrest.

Market Trend

The Algerian car market has been hit extremely harshly in 2020 by the world-wide COVID-19 pandemic affecting an already difficult environment.

The Algerian automotive industry was fighting to recovery after the sharp fall reported during the last years, generated by the government strategy to build up local production, banning the vehicles import. The market is now heavily concentrated in those manufacturers which have decided to start up local facilities.

In the last six years, the automotive industry in Algeria has dramatically changed, losing over 70% of volumes, due to the government’s decision to block the vehicles import and push all carmakers willing to sell in the country, to establish local facilities.

While the purpose was not original, the approach led to a shortage of products, and prices jumped in the sky, with market collapsing from the all-time record of 429.960 light vehicles units hit in 2013, to a minimum peak of 101.979 units sold in 2017. At that point in time, when the first plants have been able to start a growing production, the market approaches the recovery, growing at 127.300 in 2018.

However, in 2019 the market did not hold the recovering trend, registering 123.964 units, down 2.6% from the previous year.

2020 represents however a huge step back, with the market deeply declining hit by the economic crisis generated by the COVID-19 restrictions and by the fall of oil price and export. Indeed, Full-Year sales for 2020 have been 20.571, reporting a decline of 83.4% compared to 2019.

Brand-wise, this year the leader Renault (-76.5%) gained 17.6% market share, followed by Volkswagen (-87.3%), which lost 3.1% share. Seat (-92.1%) ended up third -down 1 spot- and  lost 7.8% market share.

The most sold model in the country remains the Renault Symbol with 11.413 sales (-75.9%), holding 55.5% share.

Economic Environment

Economic growth accelerated in the third quarter as the economy benefited from a healthy rebound in the hydrocarbon sector. In fact, the hydrocarbon sector posted its first annual increase in two years. The non-energy economy, however, performed poorly as bad weather hit agricultural production and a protracted political crisis dampened both business and consumer confidence.

On the political front, Abdelmadjid Tebboune won the 12 December presidential election and appointed a new government on 2 January. Although Tebboune attempted to assuage protester’s concerns, mass rallies continued, with demonstrators accusing the new President of being part of the traditional political establishment. Algeria’s political crisis has been exacerbated by an ailing economy caused by a massive drop in oil revenues.

Market Trend

In the last five years, the automotive industry in Algeria has dramatically changed, losing over 75% of volumes, due to the government decision to block the vehicles import and push all car makers willing to sell in the country, to establish local facilities.

While the purpose were not original, the approach has been so though to create a very shortage of products and prices jumped in the sky, with market collapsing from the all time record of 429.960 light vehicles units hit in the 2013, to a minimum peak of 101.979 units sold in the 2017. At that point in time, when the first plants have been able to start a growing production, the market approach the recovery, growing at 127.300 in 2018.

However, in 2019 the market did not hold the recovering trend. Indeed, Full-year sales have been 125.121, down 1.7% from the previous year.

Brand-wise, the ranking has seen again by Renault on top, managing to control over 40% of the market. Top competitors were Seat, able to reach 15.7% of share, followed by Dacia, Volkswagen, Hyundai and Skoda.

Tables with sales figures

In the tables below we report sales for all Brands, top 10 Manufacturers Group and top 10 Models

Economic Environment

Algerian economy slowed slightly from Q2’s already weak showing in Q3, as oil and gas production contracted at an even sharper pace than in the previous quarter and as service sector growth softened slightly. Nevertheless, higher oil prices in the quarter likely buttressed the government’s coffers in the period.

Sonatrach’s massive investment plan and a new energy law should drive growth this year by stimulating investment. However, a weak non-oil economy and high unemployment leave the country vulnerable to a prolonged downturn in oil prices.

Market Trend

Algerian vehicles market is literally in a chaos, after the sharp reduction of volume (-75% in four years) due to the government decision to reduce sharply the number of licences to import. This decision was criticised by the new Prime Minister, Mr. Abdelmajid Tabboun, appointed in May 2017, which noted as the cost of locally assembled vehicles was widely higher than imported. Indeed, in the country there is not the technological base and knowledge to efficiently produce new cars and Manufacturers are just assembling, with the CKD production system, vehicles and parts build somewhere else, with higher cost of production than usual.

In addition, the range of local made models are very limited and the distributors/dealers have low competition, increasing their margin offering higher price to the final customers. However, no effective actions had been taken by the new prime minister so far.

Many car makers have accepted the “invitation” to produce locally, but they need time to appropriately set up operation. Following the Renault-Dacia plant, in July 2017 Volkswagen Group started operations to produce several models, like VW Golf, VW Caddy, Seat Ibiza and Skoda Octavia. Hyundai Group is also producing locally and Suzuki is building a new plant. Peugeot will produce since 2019, via a joint venture.

Light Vehicles sales volume had dropped dramatically in recent years from the record established in the 2013 with 423.000 units. Losing over 75% of volume in four years, the market landed to only 102.066 in the 2017, near one-fourth of sales lost in four years!

In the 2018 the market has finally started the recovery, fueled by the start of production and sales of the cars locally produced, mainly by the Volkswagen group and by Seat. The market shown the start of the recovery, up 24.8%, at 127.300.

Market	Sales 2014	Sales 2015	Sales 2016	Sales 2017	Sales 2018	'+/- 2018
Car+LCV	339.385	263.777	129.977	101.979	127.300	24,8%

At brand-wise, the 2018 market leader was Renault selling 52.321 vehicles (+22.2%) followed by Dacia with 18.616 (-2.5%), Seat with 18.500 (+260.6%) and Volkswagen with 12.203 (206.9%).

Market Outlook

After the strong fall of recent years, the Algerian market is expected to have started a recovering and is seen positive for the entire 2019-2025 period of time. The progressive introduction of new vehicles produced locally which will have a price gap over the imported, will continue to expand the customer choice. While economy is not seen booming, however the market actually stands well below the real potential.

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Algerian economy in 2017 pointed to a modest performance. Although GDP growth in the quarter was 1.4% higher than the same quarter of 2016, up slightly from Q2’s revised 1.3% (previously reported: +1.5% year-on-year), it was low by historical standards.

Growth was propped up by the industrial, construction, agricultural and service sectors, while the hydrocarbon sector—which is suffering from capacity constraints due to lackluster investment—contracted sharply.

Different is the mood inside the automotive industry, the second largest in Africa untill a couple of years ago and then killed by the government project to boost the national production and block the huge cash-out for vehicles import. Nothing wrong in these scopes while the way to achieve these targets has been really naif.

Reducing the licence to import, the government has just reduced heavily the authorization to import vehicles released to OEMs and market dropped down rapidly in the 2016, when at the end just 98.000 licenses were released. For the 2017, the number of licences should have been below the 50.000 officially announced (no certain data released).

Many car makers have accepted the “invitation” to produce locally, but they need time to appropriately set up operation. Following the Renault-Dacia plant, in July 2017 Volkswagen Group started operations to produce several models, like VW Golf, VW Caddy, Seat Ibiza and Skoda Octavia. Hyundai Group is also producing locally and Suzuki is building a new plant.

However, the authorities, following the appointment of Abdelmajid Tabboun as prime minister last May, have adopted a number of measures and are preparing to set up a new book of conditions to frame the installation plants and all new licences to produce with SND system have been blocked.

Indeed, the policy in place have killed the market, penalizing all importers while heavily sustaining the activity of re-assembling vehicles (so, not really produced in Algeria) with higher cost for producer and customer price increased by over the half in 3 years, generating a flow of grey import and penalizing official distributors network. A real disaster!

Indeed the vehicles market fell down from a record of 423.000 sales in the 2013 losing over 75% of volume and landing at 102.066 in the 2017. For the 2018 we forecast a stabilization of volume, while all operators are waiting for new move from government.

At brand-wise, Renault sold 42.831 vehicles (+11.9%) followed by Dacia with 19.091 (-16.9%) and Hyundai with 12.336 sales (+38.6%), all keeping advantages by the competitive advantage to produce locally.

Tables with sales figures

In the tables below we report sales for all Brands, top 10 Manufacturers Group and top 10 Models

The Algerian Government has decided to transform the automotive sector from a net cash out, due to heavy import of vehicles for  near 6 billion US Dollar in the 2014, to a net cash out, creating from scrap a local industry, producing and exporting.

Nothing new, but the procedure applied in this pathway has not probably one of the less brilliant ever.

After the  start up of Renault plant in the 2014, producing the Symbol, a model for which Algerian people is not really loved, in the 2015 import of vehicles was limited to the release of licences, originally 152.000 and then reduced at 83.000 and then lifted at 98.000 in a big mess with all, really ALL, from customers, to dealers to car manufacturers unhappy.

The country has reduced at just US$ 1 million the cash out for cars, but the collapse of the entire distribution channel has hit the National GDP for an estimated 1.5 points.

Meantime, several OEMs have negotiated to open a local plant as soon as possible and Volkswagen Group should be the fastest, opening in the 2017.

Effect of the immediate shortage of products, lifted vehicles price on the sky, creating room for grey market, now flourishing for un-official car sellers, operating without rules and service, on the shoulder of the established, expensive, structured, regular dealers.

Numbers are “fluctuating” as the local authorities have decided to stop releasing sales data, probably in the hope to hide the mess created by themselves. Unofficial data collected by our Team report for a full year vehicles sales of 145.041 units, down 42.6% from the previous year, the third heavy drop since the 2014 record of over 0.4 million units.

Only one winner, Renault Group, with Dacia and Renault at 51% of market share, albeit having lost volume as well.

Tables with sales figures

In the tables below we report sales for all Brands, top 10 Manufacturers Group and top 10 Models