Algiers (AFP) – South Korean carmaker Kia will shut down its assembly line in Algeria from Sunday due to supply chain disruptions after authorities imposed a ban on the import of spare parts.
“Work will be interrupted from May 17” at the factory in the town of Batna, northeast of the capital Algiers, according to an internal company message published by employees on Facebook this week.
Around 1,200 people were employed at Batna, where production was launched in 2018 with a reported capacity of around 50,000 vehicles, although not more than 10,000 were ultimately assembled there.
There was no immediate confirmation from the company.
The decision to halt production comes after the government announced on Sunday it would indefinitely ban the import of spare parts used in assembly lines.
The ban was expected to deal a heavy blow to Algeria’s nascent automobile industry, which revolved around the “semi knocked-down” or SKD kits system.
Launched in 2014, the SKD method consisted of vehicle part kits that were imported from the producer and then assembled.
Use of the system aimed to reduce the import bill in Algeria at a time when oil revenues were dropping as global prices fell.
But it apparently had an opposite effect and was surrounded by domestic corruption scandals last year in Algeria.
In December 2019, carmaker Volkswagen also suspended production in the North African country, where the head of its local partner was detained as part of a graft probe.
Several prominent politicians and businessmen linked to former president Abdelaziz Bouteflika have been detained or questioned in connection with corruption since the ailing leader was forced to step down in the face of mass protests in early April last year.
South Korea’s Hyundai Motor — along with its affiliate Kia — ranks as the world’s fifth-largest auto manufacturer.