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Algeria Autos Report Q3 2011
Business Monitor International, May 2011, Pages: 33
The Algeria Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Algeria's automotive industry.
Figures released by the Association des Concessionaires Automobiles d’Algerie (ACAA) show that a total of 222,123 new cars were sold in Algeria in 2010(excluding sales figures from the local BMW and Mercedes-Benz dealerships). This represents a slight decline on the 227,781 cars sold in the country in 2009 (according to ACAA data) and comes as Algerian consumers still found it hard to make new car purchases.
The majority of vehicles sold in Algeria are imported (with the exception of some industrial vehicles
produced domestically), so trends in import movements act as an early indicator of the future direction of new car sales. Looking at the evolution of imports over 2010, data released in February 2011 by the national customs centre for data processing and statistics – CNIS – stated that Algeria imported 285,337 vehicles in 2010, an increase of 2.68% y-o-y. Over the 12-month period, the country’s 40 leading car dealerships imported a total of 265,589 vehicles (at a total import cost of MAD242.8bn), compared with 255,385 units (at a total import cost of MAD253.8bn) for 2009. Individual car imports fell over 2010, from 22,496 units in 2090 to 19,478 units in 2010, a fall of 13.42%.
This final-year outcome was far better than BMI had anticipated, given that after nine months of 2010, vehicle imports were down by 16.4% according to CNIS figures. However, as we have stated before, one feature of the Algerian autos market is that there can be a slight time delay between cars being imported into the country and their eventual sale and registration. To underline this point, the country’s office of national statistics (ONS) has stated that, out of 2008’s total imported vehicles, some 20,850 vehicles were not actually registered until 2009.
Looking at trends in 2011, a total of 74,781 cars and trucks were sold over the first quarter, according to figures from Motors Magazine (these figures exclude any sales from the local dealerships of Great Wall Motors, BMW, Mini, Mercedes-Benz, Chana, JMC, Harbin Hafei, Ssanyong Motor, Dongfeng Motor, Automobile Chery, Jin Bei, Mahindra and Mahindra and Tata Motors). This represents a 35.4% annual increase. Given this incredibly strong start to the year, which would appear to indicate that the Algerian car market is now well and truly out of the slump it witnessed over the 2008-2010 period, we are now forecasting annual sales to be up by 15% y-o-y, to reach 278,895 completely built units.
Beyond the current year, we would hope for continued upwards growth (of around 5% per annum) for vehicle sales, in line with a growing domestic economy. We forecast that the annual volume of total new vehicle sales should surpass the 338,500 unit mark in 2015. Moreover, if local car production takes off as we expect, we would anticipate making additional upwards revisions to our overall sales figures, as locally produced cars would likely be cheaper, thereby boosting domestic demand.
Foreign Carmakers Keen On Algeria In March 2011, German carmaker Daimler announced a new joint venture (JV) bus and truck assembly plant in Algeria as part of its North African expansion. This is in line with BMI's view that as long as large-scale political upheaval can be avoided, Algeria is one of the most attractive growth markets for the auto sector in the region.
The project has been largely facilitated by Daimler's Abu Dhabi-based stakeholder Aabar Investment, which has formed a JV with the Algerian government in Rouiba. The JV will have management control of the plant, while Daimler will provide the parts for production of trucks and buses. Exact vehicle models are as yet unknown, as is the size of the investment.
For Daimler, it is the growth potential of Algeria, for all vehicle segments, which has secured the project. According to Peter Alexander Trettin, head of sales for Mercedes-Benz in Central and Eastern Europe, Africa and Asia, Daimler plans to strengthen its North African presence and will be 'exploiting the Algerian market's growth potential'.
This potential means that the auto sector has actually bucked the trend for subdued foreign investment. In November 2010, French carmaker Renault said it had returned to a shelved plan to build a production plant in Algeria, after changing certain details of the project to secure the government's backing. With one existing plant, and another in the pipeline, in Morocco, the North African region features heavily in Renault's overseas strategy.
Similarly, Volkswagen (VW) has approached the country's authorities as part of its goal to become the world's leading carmaker by 2018. While Renault's revisited plan looks set to win the approval of the Algerian government, planning is still in the early stages for VW, but there is a suggestion that the country would serve as a base for the wider region.
The publisher believes North Africa will develop into a hub for carmakers spreading into the wider African region and with uncertainty currently surrounding industry policy in Egypt during the transition of power, there are opportunities for Algeria and Morocco to win investment, which may have been previously intended for the larger market. BMI also sees valuable sales growth potential in the two markets: with average annual growth of at least 7% from 2011-2015 in Algeria and 12% in Morocco.
Market Overview Renault is the market leader in the country by a comfortable margin. The French firm, operating under its local sales and distribution subsidiary Renault Algérie, sold a total of 63,359 new vehicles in Algeria in 2010, inclusive of 44,786 vehicles under its main banner, and 18,573 vehicles belonging to the Automobile Dacia brand. This amounts to a combined market share of 28.5% of new vehicle sales in Algeria for the year. There is a considerable gap between Renault Algérie and the number two auto company operating in Algeria, Hyundai Motor. The Japanese firm sold 31,681 vehicles through its local distributor Hyundai Motor Algérie in 2010, giving it a market share of 14.3%. In third place is Peugeot, which sold 22,839 vehicles in 2010, for a market share of 10.3%. In fourth place is Toyota Algérie, which sold a total of 21,389 vehicles (19,453 under its main banner, plus a further 1,936 Daihatsu models), for a market share of 9.6%, with Chevrolet rounding up the top five, with 2010 sales of 19,810 units giving the US car company a market share of 8.9%. This report includes a SWOT analysis for both Renault Algérie and Toyota Algérie.
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