Peugeot Will Produce 30% of Parts for Algerian Plant in Iran

French carmaker PSA Group will source 30% of parts for cars that will be assembled in the Algerian plant from Iran, said a senior official of Iranian Auto Parts Manufacturers Association.

An agreement was signed in this respect between PSA Group and car part manufacturer Iran Khodro (IKCO), Mohammad Reza Najafi-Manesh, a member of the presiding board of Iranian Auto Parts Manufacturers Association told the press.

PSA signed deals worth €700 million with Iran Khodro last May for the joint production of 200,000 cars per year.

The news shows that the PSA plant in Algeria will be largely supplied with parts from abroad turning it into a mere assembly plant. The car assembly plants in Algeria have a low local sourcing rate, with most parts imported from abroad as semi-knocked down kits, thus further aggravating the country’s import bill with only tires being made in Algeria. Locally produced parts made up in 2016, only 10 to 15% of cars made in Algeria.

This will turn Algeria’s plans to develop car manufacturing into “disguised imports” when considering the very low local sourcing rate.

Last month, PSA executive vice-president for purchasing, Yannick Bézard, invited Iran Khodro to set up shop in Algeria where Peugeot is launching a manufacturing unit.

Peugeot signed a joint venture worth around €100 million last November to produce cars for the Algerian market, with the production line due to become fully operational in 2019.

The figures are but the tree that hides the forest, when considering that Algeria’s aim to develop a local car industry has turned into “disguised imports”.

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