German car manufacturer Volkswagen halts production activity in Algeria

MOROCCO – Volkswagen, one of the world’s largest car manufacturer has announced the suspension of all its activities in Algeria until further notice.

“Because of the political crisis in Algeria, Volkswagen has suspended production in this North African country at the moment.

Deliveries to the official partner of the country, Sovac, have also been suspended,” Volkswagen told the German press.

The German company’s decision is a result of the political crisis in Algeria.

The 10-month-old crisis started in February 2019 and is still ongoing, despite the election of a new president.

The German company explained that another reason behind their decision was the lack of transparency in their plans with their Algerian partner Sovac, especially after the arrest of its head in June.

According to a manager at Sovac, “more than 1500 assembly kits destined for Relizane plant are still blocked in Oran’s port, northwest Algeria, since last July, and more than 2200 kits are blocked in European ports.”

The Sovac manager said that following this unexplained blocking, Volkswagen decided to suspend shipping assembly kits to Algeria last August.

As a result, “around 700 employees are in technical unemployment” and the “plant stopped [functioning] since last September.”

Volkswagen has been operating in Algeria since 1999 and in 2016, Volkswagen and Sovac opened a joint assembly plant in Relizane.

Volkswagen had noted that the short construction period of the facility was particularly attributed to the close cooperation between the brands of the Volkswagen Group and SOVAC.

Prior to the plant’s establishment, SOVAC’s parent company has been the official representative of Volkswagen in Algeria for the past ten years and is also home to some 90 dealers of the Group’s brands.

The US$170 million plant was opened by Algerian Industry Minister Abdesselam Bouchouareb in 2017 and was able to produce 50,000 vehicles last year.

Volkswagen held a minority stake in the joint venture, SOVAC Production SPA, which assembled vehicles under the Volkswagen, Volkswagen Commercial Vehicles, SEAT and Skoda brands.

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