The government has “decided to cancel the preferential regime for the import of SKD / CKD lots for vehicle assembly,” said a statement issued Sunday evening after a cabinet meeting.
This decision should put a permanent halt to the young Algerian automobile industry based on the SKD system (“semi knocked down”), which consists in importing the vehicle in pre-assembled kits, simply riveting or bolting on the spot.
The government has therefore decided to authorize “the import of new tourist vehicles by car dealers”, suspended since the launch of assembly plants from 2018 after having been subject to an import quota system in 2016, specifies the press release.
However, due to the lack of locally produced parts and a real subcontracting sector, the savings made were canceled out by the invoice for the import of the kits.
In fact, the dual objective of reducing the import bill and the price of vehicles on the local market has never been achieved.
Since 2017, several senior Algerian officials have criticized these assembly plants, saying that they had no impact on foreign exchange reserves but that they had a significant cost for the state in terms of aid and tax advantages .
Most assembly plants are currently shutdown.
Big bosses in the automotive sector have been imprisoned or sentenced in corruption investigations launched after the fall, in April 2019, of President Abdelaziz Bouteflika, under pressure from an unprecedented protest movement.
During the first major trial for corruption, four bosses of large groups, partners of foreign brands including Chinese, were sentenced in December to terms of three to seven years in prison, confirmed on appeal last March.
The trial showed that large Algerian groups, often owned by businessmen linked to Mr. Bouteflika’s entourage, were favored, despite rarely respected specifications, and benefited from significant public aid and many tax advantages.
This scandal resulted in a loss for the Treasury estimated at more than 128 billion dinars (975 million euros), according to official figures.