German Carmaker Volkswagen’s expansion strategy and choices of plant locations have come under a cloud these days. The company was forced to suspend its plans for a new assembly plant in Turkey recently following the Turkish military’s invasion of Syria. Now its plant in Algeria has come under fire.
Volkswagen opened production facilities in 2017 in Algeria with its local partner Sovac. The factory located at Relizane, some 250km south-west of Algiers assembles kits provided by the German parent company. In 2018, the plant produced around 50,000 Volkswagen, Audi, Seat, and Skoda vehicles.
German press reported that the company’s production at the assembly plant and deliveries of assembly kits have been temporarily suspended due to the tense political situation in Algeria. Algerian news agencies also reported Sovac,s announcement of the suspension of production at the factory in October, leaving 700 employees jobless.
Since the ouster of former Algerian President Abdelaziz Bouteflika, several prominent politicians, and businessmen linked to him have been detained or questioned for corruption allegations. The head of Volkswagen ‘s local partner Sovac, Mourad Oulmi has also been detained since June in a corruption probe. The political crisis in the country that has been undergoing severe mass protests against the political leadership since February, aggravated when presidential elections were held last week. The protestors accused the military and the coterie of the former President to have manipulated the elections. Just prior to elections, many more activists and business leaders and politicians were arrested, and given long prison sentences on corruption charges.
