Volkswagen begins joint venture with Algeria’s SOVAC for local assembly

Volkswagen signed a deal on Sunday for assembling vehicles in Algeria in a joint venture with its regional automobile importer SOVAC, going for a production capability of over 100 vehicles daily from June 2017, Volkswagen and Algerian officials stated.

The automobiles will be put together at a $170 million plant in the western province of Relizane, Algerian Market Minister Abdesselam Bouchouareb informed at a signing ceremony in Algiers.

Volkswagen will hold small stake in a new joint endeavor, SOVAC Production SPA, which will assemble cars under the Volkswagen, Volkswagen Commercial Vehicles, SEAT and Skoda.

Algeria has been attempting to improve financial investment and diversify its economy to compensate for a drop in oil and gas earnings and lower a heavy import bill.

However relocation to reform the economy and improve foreign investment have shown challenging with oil and gas production responsible for 95 percent of the country’s export earnings and 60 percent of the state spending plan.

In July the nation authorized a new investment law focused on enhancing investment terms outside the oil market.

“This reveals that the financial investment environment has enhanced,” Bouchouareb told at the signing event on Sunday. “Our main goal is to lower imports.”

SOVAC’s chief executive, Mourad Oulmi, stated the move would help in reducing the expense of vehicles in the North African nation, which SOVAC intended to start exporting “in the next couple of years”.

“We will have the ability to meet demand in Algeria,” informed Volkswagen executive Josef Baumert. “This project opens new doors for us.”

Previously, Baumert stated in a declaration that Volkswagen opted for the joint venture after effectively teaming up with SOVAC “for many years”.

“For us, this is a sensible action toward increasing automobile sales in Algeria in the long term,” he stated.

SOVAC has actually been a sales partner for Volkswagen from 2001, Volkswagen stated, adding it provided 30,000 new automobiles via SOVAC in 2015.