German auto giant Volkswagen signed a deal to assemble cars in Algeria in a joint venture with its local car importer SOVAC. According to VW and Algerian officials, the main aim of the deal is to produce more than 100 vehicles per day from June 2017.
The cars will be assembled in the western province of Relizane at a $170 million plant. This was announced by the Algerian Industry Minister Abdesselam Bouchouareb at a signing ceremony in Algiers.
Sovac Production SPA will assemble vehicle under the Volkswagen, Volkswagen Commercial Vehicles, SEAT and Skoda brands. VW will hold a minority stake in this new venture.
Algeria has been trying to boost investment and diversify its economy to compensate for a drop in oil and gas earnings and reduce a heavy import bill.
But moves to reform the economy and improve foreign investment have proved difficult with oil and gas production accounting for 95 percent of the country's export revenues and 60 percent of the state budget.
Bouchouareb said at the signing ceremony, "This shows that the investment climate has improved. Our main goal is to reduce imports." Also, SOVAC's chief executive, Mourad Oulmi said, "We will be able to meet demand in Algeria. This project opens new doors for us."
Recently, Baumert said in a statement that VW has opted for this joint venture after successfully collaborating with SOVAC "for many years."
He added, "For us, this is a logical step towards increasing vehicle sales in Algeria in the long term."
Most Read: Volkswagen Reveals Arteon Premium Saloon Prior To 2017 Launch