Algeria’s Minister of Industry Sifi Gribble recently held high-level talks with OMODA/JAECOO, the premium brand of China’s Chery, to reach a preliminary cooperation framework for the establishment of a localized production base for passenger cars.
This project, if landed, will become one of the largest foreign-funded cooperation projects in the history of Algeria’s automotive industry, marking a key step in the country’s push for industrialization and transformation.
Layout of the whole industry chain: from assembly to parts manufacturing
China and Algeria plan to build an integrated automotive plant in Algeria, covering vehicle assembly, key components production and R&D center.The project is particularly focused on improving the integration rate of the local supply chain, and is intended to promote the local production of more than 70% of the components, involving engines, chassis systems and other core components.
SME Empowerment: Building Localized Clusters
Another core objective of the project is to cultivate a local automobile industry cluster in Algeria.According to the plan, the Chinese side will join hands with IRIS Group to set up an “auto parts industrial park” to support local small and medium-sized enterprises (SMEs) to enter the supply chain system, which involves the fields of stamping, welding and electronic parts.
“This is not a simple transfer of production capacity, but a systematic export of knowledge and skills,” said an official from the Algerian Ministry of Industry who participated in the talks.
Strategic Location Advantage: Radiating Markets on Three Continents
Relying on Algeria’s geographical advantage of connecting the Mediterranean Sea with the Sahara, the project plans to use part of its production capacity for export, with target markets covering French-speaking Africa, the Middle East and Southern Europe.
In particular, with the Arab-European Free Trade Agreement, automobiles produced in Algeria can enter the EU market at zero tariff, a policy dividend that makes the project more competitive compared to South Africa, Morocco and other African automobile bases.
Brand Background
OMODA: On November 19, 2021, Chery Automobile officially unveiled its new product series at the Guangzhou Auto Show and debuted the first model of the series, the OMODA 5, at the world premiere.
Market Positioning: Aiming at the “new generation of hardcore gamers”, it is committed to using Chery’s cutting-edge technology to create an outstanding trendy travel experience for the new generation of hardcore gamers around the world.
Market performance: In the first half of 2024, Chery sold a total of 2,553 Omoda 5 units in the European market, mainly in the debut market Spain, outperforming well-known brands such as Alfa Romeo, Land Rover and Honda.
JAECOO: A new brand launched in April 2024 by Chery Automobile, which currently offers two SUVs, the J7 and J8.
Market Positioning: Mainly in the field of urban cross-country SUVs, the target group is mainly young, energetic consumers who pursue quality of life and driving pleasure.
Suggestions for Chinese enterprises to invest and develop in Algeria:
I. Layout of localized production of the whole industrial chain, strengthening technology transfer and production capacity landing
According to the plan of “building an integrated factory dedicated to vehicle assembly and production” and “increasing the rate of local integration”, Chinese enterprises can focus on investing in vehicle assembly lines and production lines for core components such as engines and chassis, and synchronize the introduction of Chery’s modular production platforms (such as the M3X Mars architecture) to realize the flexible manufacturing of multiple models.M3X Mars Architecture), to realize flexible manufacturing of multiple models.And we can set up localized R&D centers and dispatch technical teams to lead the transformation of key processes.
Second, linking local small and medium-sized enterprises to create an automotive industry cluster ecology
In response to the demand for “developing a national network of suppliers and subcontractors”, Chinese enterprises can join hands with IRIS Group to build an “automotive parts industrial park” to provide targeted support for local SMEs to enter the supply chain of stamping, welding and electronic parts, and at the same time guide domestic suppliers to set up factories in Afghanistan to form technological complementarities with local enterprises.At the same time, it can guide domestic supporting suppliers to set up factories in Afghanistan and form technical complementarity with local enterprises.
III. Building a regional export hub based on geographic and policy advantages
Taking advantage of Algeria’s geographical condition of connecting the Mediterranean Sea with the Sahara, Chinese enterprises can focus on docking the French-speaking African, Middle Eastern and Southern European markets.
In line with the goal of “becoming a regional industrial hub”, it can cooperate with the Algerian Agency for the Promotion of Investment (AAPI) to apply for logistics subsidies and market access support, as well as to participate in the local automotive export certification system, so as to enhance the competitiveness of its products in the continent’s FTAs.
Chinese enterprises in the automobile industry in Algeria need to invest in the “whole industry chain localization + regional market radiation” as the core strategy, through the technology sinking, supply chain integration and policy synergies, not only to meet the needs of Algeria’s industrialization transformation, but also to take advantage of the situation to build China’s automobile brand manufacturing and export hub in Africa.
Article source: Meet North Africa
