Renault Algeria plant deal ends 33-year absence

PARIS -- Renault plans to build a factory in Algeria as part of its push for growth in Africa.

An agreement with the Algerian government will be signed during French President Francois Hollande's visit to the North African country this week, Renault spokeswoman Raluca Barb said today.

The factory, located near in the western Algerian city of Oran, will eventually produce as many as 75,000 vehicles in the same segment as the Renault Symbol, a sedan based on the Clio subcompact, Barb said.

Renault abandoned its last Algerian factory after the former French colony's 1962 independence led to nationalization seven years later. The new plant deal would make Renault the first carmaker to restore local production.

Renault is looking to Africa for growth, pushing rugged, no-frills models such as the Dacia Logan as its sales decline in Europe faster than any other major carmaker.

New-car sales in Algeria increased 46.5 percent in the first half to 225,000 vehicles.

Hollande's visit to the country is also likely to raise a potential Algerian investment in PSA/Peugeot-Citroen, a diplomatic source said last week.

Renault is the best-selling brand in Algeria with 67,132 vehicle sales in the first 10 months, followed by Peugeot at 54,500, Hyundai at 43,260 and Dacia at 32,918, according to IHS Automotive.

As part of an expansion in North Africa, Renault and alliance partner Nissan Motor Co. are ramping up production at a 1 billion-euro ($1.3 billion) plant in the Moroccan port city of Tangier.

Unlike the Morocco factory, which has a planned capacity of 400,000 vehicles a year, Renault's Oran facility will build cars exclusively for the local market.

Bloomberg and Reuters contributed to this report.