Renault opens new Algerian plant to capitalize on the emerging African market

French automaker Renault has opened a manufacturing facility in Algeria, Africa. The new plant has the capacity to produce in the region of 25,000 vehicles per annum and will initially begin by manufacturing its 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, said. According to the company, a second phase, which will increase production to 75,000 vehicles annually, is also under consideration, demonstrating the company’s commitment to sales in the region.

Renault’s low cost cars and its presence in emerging markets have helped it come out of a six-year slump experienced in the European market. The Algerian plant is the first Renault plant on the continent since 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 the company’s second largest automotive market in Africa. South Africa remains its biggest African market.

Sales in Algeria, as of 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 due to the fact that approximately three million vehicles present on the country’s roads are have an average age of 16 years. The company expects there to be a boom in new car sales in coming years.

Renault owns 49 percent stake in the plant and has made an initial investment of $62 million. It has hired in the region of 350 staff, which are being trained 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.