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The history of Renault in Algeria

Renault made its first presence in Algeria in 1922 with the creation of S.A.D.A.R. (Société Algérienne des Automobiles Renault) which was responsible for distributing the brand's vehicles to the Losange. The conquest of the Algerian market is timid for Renault unlike its competitor Citroën which adopts a policy of conquest of the external market while Renault remains focused on its internal market. The economic crisis of 1930 will change the deal, and Renault changes strategy, it wants to sell in Algeria, but it has already fallen far behind its competitor on the Quai de Javel, which is increasing its marketing actions, in particular its missions and cruises ( we will come back to this in a future article).

To mark an additional point on Citroën, but also to overcome logistical difficulties, Renault's sales management is wondering about the possibility of setting up an assembly plant in Algeria. A feasibility study is then engaged, but it looks like a page of colonial geography. Recognizing the lack of road, rail and maritime infrastructure between Algiers, Bône and Oran, the study concludes that "if there were to be an assembly plant in Algeria, it would be better to be located in Marseille". The Liberation changed the game: the president of the new national management of Renault factories, Pierre Lefaucheux, was convinced that economic development should help the colonies to gain their independence.

A real mess at a time when governments are reaffirming the foundations of French Algeria. In 1951, Renault, which provided strong support to the colonies, planned to build five factories in the associated states of the French Union, all financed from public funds. The sites chosen are Casablanca, Algiers, Tunis, Beirut and Saigon. Distraught, the public authorities refuse to support projects deemed "more political than economic". Lefaucheux then engages in one of those great battles that mark his presidency. Despite the hostility of Paris, he obtained the help of the General Government of Algeria and the commercial subsidiary of Renault. Enough to relaunch the project of a factory near Algiers, in the Maison Carrée district. The project provides for a capacity of 35 car-days with 300 workers. Inflexible, Paris vetoed, refusing any initiative from a national company that displayed far too much autonomy: “the Renault company would be well advised to remain in its sole role of car manufacturer”.

It was not until December 1954 that the study of a factory in Algiers resumed. Pierre Lefaucheux's ideas have matured: convinced of the need for the emancipation of Algeria, Pierre Lefaucheux wants the Algiers factory to be built thanks to "a significant part of Algerian capital which should be Muslim capital". He and his relatives, however, regret "the attitudes of well-to-do Algerians who are worse than those of the settlers whom we do not want". The death of Lefaucheux in February 1955 obviously slowed things down, even if his management team (which remained in place) and his successor (Pierre Dreyfus) were determined to respect the commitments of the first president of the Régie. “Let’s not forget, recalls Fernand Picard, Director of Studies and close to Lefaucheux, that in the spirit of Pierre Lefaucheux, one of the goals of the operation was to give a factory to a population. It was really the patriotic donation to save Algeria”.

The announcement of the Constantine Plan (1958) which finally launched the industrialization of Algeria, boosted things, and thus, on November 19, 1959, the first stone of the C.A.R.A.L. (Construction of Renault Automobiles in Algeria) is posed at Maison Carrée (Algiers) by Pierre Dreyfus CEO of Renault. He specified on this occasion that the Régie intended to maintain its first place in Algeria. "In 1958, he declared, we exceeded the delivery of one thousand vehicles per month against six hundred and eighty for the whole of 1938. Last year the Régie sold thirteen thousand vehicles in Algeria, covering 31 .2% of this market. For the first nine months of 1959 we recorded an increase of 30% over 1958. ". The CARAL project costs 13 million francs, 9 of which are covered by the loan.

On February 6, 1961, the first Dauphine made in Algeria left the factory with a loan production of 50 units per day. It is "a date that will mark history" writes a local press which reports the event with great enthusiasm.

Renault offers Peugeot to join it at Maison Carrée, but the Sochaux firm politely refuses, after having carefully analyzed the situation: “We can have a factory in Algeria for a derisory sum thanks to subsidies. But the safety and quality conditions are not met”. Renault therefore works alone. But the threats of the Secret Army (O.A.S.) towards the Muslim workers push them to stop coming to the factory. The transport of CKD boxes, leaving the port of Algiers to the factory, becomes impossible to ensure. The O.A.S. threatens to plasticize the Renault factory and the factory closes during this period of the end of the Algerian war.

After independence, the young Algerian government negotiated the operating conditions of CARAL, which became Renault-Algeria and came under the supervision of a state company, SONACOME. From 1962, the Renault factory will be exempt from all import duties, and protected by a monopoly. The planned economy provides for no competing factories, and car imports (except those from Algerians returning to the country) will be heavily taxed. The factory can therefore start up in the clemency of the planned economy, and grow calmly. It does so at the rate of the agreements signed with the government: 12, 17, 20 then 24 cars per day, with the objective of reaching 25 as quickly as possible, i.e. the break-even point of the case. New models are introduced, such as the R4 and R8, but also SAVIEM utilities and agricultural equipment from the Le Mans factory.

The first tensions began in 1965

After the coup d'etat of Boumediene who becomes the new master of Algeria. The first observation is: "that an external private company cannot retain the monopoly that is offered to it today". We have to wait a few months, and the negotiations for the development of CARAL to measure the changes. If the Régie continues to seek financial aid from the Algerian State, the ministries believe that it is up to Renault to finance CARAL by drawing on its frozen assets. The non-convertibility of the dinar forces the Régie not to repatriate its money to France or more certainly to its Swiss subsidiaries. In 1966, the Régie agreed to draw on its assets to provide the 2.5 million dinars needed to increase the capital of Renault-Algeria. This operation strengthens the assets of this subsidiary, consolidates its balance sheet to the point of being able to request and above all obtain loans from the Central Bank of Algeria. However, strange rumors are circulating. It is said that Renault would be less defended by the Ministry of Agriculture than by its counterpart in Industry. “Fiat would be about to respond to a tender for agricultural tractors. Is this the start of a change? Relations with the Algerians are good, explains Dreyfus, but not a day goes by without the arrival of Fiat, Volkswagen or Simca being announced. All are trying to persuade the Algerians that the Régie has an abusive monopoly”.

The situation is all the more worrying as the Algerian State is now renouncing to enter the capital of Renault-Algeria, a small stake remaining for Renault a means of securing the future of its subsidiary. Worried, the Régie suggests to the Algerian Ministry of Industry to increase the parts made in the country, therefore to increase local integration. But Renault and the Algerian state pass the buck to each other, again to avoid funding this development. As the negotiations progressed, differences in appreciation emerged. Structural and historical differences. Renault management has always seen Maison Carrée through the prism of former director Pierre Lefaucheux: “a factory for a people”. The Algerians, on the contrary, consider the site of El Harrach as a vestige of the Plan of Constantine. “And for the Algerians, adds Dreyfus, CKD editing is the very sign of enslavement and colonialism”. In 1969, the contract between Renault and Algeria was renewed in a context of great tension. Paris' suspension of purchases of Algerian wines led to a boycott of French goods. This brake on commercial relations makes us fear the worst. But can we blow hot and cold on Algeria's leading industrial sector excluding hydrocarbons, on an essential activity in the country with 7,600 cars, 3,200 utility vehicles and 360 tractors produced per year? However, the authorities openly criticized the involvement of the Régie in SOMACA, an assembly subsidiary in Morocco (1966). This factory, announce the representatives of the Algerian ministries, "it is the second line which will not be installed in Algiers". In this tense climate, the press hinted at the imminent arrival of Fiat, which would be authorized to build a factory near Constantine. Fiat is so courted that it begins to dream, asking as a condition of entry the takeover of the Maison Carrée factory!

In June 1970, Renault again tried to negotiate, and offered to support the global development of the automobile sector. The Régie agrees to invest 700 million francs over three years to accelerate the industrialization of Algeria. But the project remains fragile, because "the Algerians must obtain medium-term credits and not too expensive from the French government". It is a question of building a second highly integrated factory near Oran, capable of mounting 25,000 R6 per year, then double that within five years. In the presence of Algerian President Houari Boumediène, an agreement was signed in Algiers on July 8, 1970, by Pierre Dreyfus and Daoud Akrouf, general manager of SONACOME. In the words of the French emissaries who are negotiating step by step with their Algerian colleagues, "We were suffocated to see the Régie's negotiations succeed". However, two events prevent us from displaying real optimism.

From disagreement to rupture (1970-1971)

In the spring of 1970, the Algerian ministries announced their wish to move the Maison Carrée site and use the facilities in place to install refrigerators there. For the sake of restructuring the metallurgical industry, the Algiers plant is considered too far from a steel industry concentrated around Annaba. But then, why sign the installation of a factory in Oran? We wonder about the geographical logic, but also about the funding since the partnership depends on the French Ministry of Finance. Second shadow on the board: the remarks made by the director of customs. The latter claims import duties and arrears from Renault. You have to negotiate at the highest level. Pierre Dreyfus analyzes the confusion in these terms: “We asked the Director of Customs if he was making fun of us. We can think that the Algerians are dealing with Volkswagen, and wish to confiscate our factory, the value of which is that of the sums for which we would be liable. Informed, the Quai d'Orsay is worried: oil, agri-food, mining products and now the automobile, bilateral relations with Algeria have never been so strained. For more efficiency, he decided in September 1970 to link all the Franco-Algerian problems in order to carry out a global negotiation. It is a redefinition of the Algerian economy. Stripped of all power of discussion, Renault becomes a spectator of its fate. Everything goes through the office of Xavier Ortoli, French Minister of Industry, who helplessly watches the escalation. Pierre Dreyfus urges the minister to let him send a telegram to Algiers to ease tensions. “We discussed day after day about sending this telegram and in the end the minister did nothing. We may learn at any moment that the factory is confiscated. On October 2, 1970, the Algerian Ministry of Industry and Energy suspended imports of Renault parts. As it is impossible to suddenly stop the shipment of CKD boxes, they pile up in the port of Algiers, not cleared through customs. Strange situation: while car parts are rusting in their crates, CARAL is running out of stocks and sees its production go from 80 cars a day to only three copies. The last twist came on January 10, 1971, with the lifting of the import suspension! The factory plans to leave. But three days later, the Algerian Ministry of Finance demanded that CARAL pay customs duties on all parts imported since 1963, i.e. 79 million dinars. "By claiming a sum equal to the value of the factory, the Algerians are preparing for confiscation." This sum is impossible to pass on to the selling prices. These are also blocked, and the R4 is sold for 10,000 dinars, without margin, logic of a factory that was never designed with a desire for profit. But the tension continues to mount. The Ministry of Customs withdraws Renault-Algeria's authorization to transfer funds to settle its external debts, i.e. nearly 45 million dinars. More mounting parts and more aftermarket parts. On February 20, the decision was made: “We are not sending anything anymore, because we are no longer being paid... and Customs is asking us for five years of arrears, that is 90 million francs. We do not understand. It was always agreed, unfortunately without it being written, that we would not pay customs duty, and that is how all the selling prices were set”. Renault is still trying to get the government to give in by invoking the fate of the 900 workers. Nothing works. On April 9, 1971, when Renault closed the factory and laid off its staff, the government announced "the reconversion of the site for better use".

The outcome

Renault excluded from Algeria: “The closure of Renault-Algeria does not pose any problem, declares the Algerian Ministry of Industry and Energy. The reclassification of the 900 employees will begin next week and the deposits paid for vehicle purchases will be reimbursed”. The Renault company considers that it is paying for the consequences of the Franco-Algerian oil dispute. If the activity of CARAL is well stopped, nothing is resolved for a factory which cannot work without Renault. SONACOME is trying to keep up appearances: to calm disappointed customers, it announces “preparing to launch an international call for tenders for the purchase of a first contingent of 4,000 passenger cars”. But it is not the import of cars that will settle the future of the factory. Deprived of parts for the models to be assembled, the new Algerian company is trying to acquire the necessary from FASA (Spain) and Dacia (Romania). Or if the first do not yield on anything, the second accept the market. The Algerian R12s become clones of the Dacia 1200, but at higher prices. Relations between Renault and Algeria are at their lowest: "We don't speak to each other, we don't know each other, but the Algerians have still ordered 2,000 Dacias. The Romanians paid us a commission”. The Algerian authorities are contacting the commercial services of embassies of Western countries and the Eastern bloc to seek suppliers. The icing on the cake, Algiers specifies that “the closure of the Maison Carrée factory will have no repercussions on the investment projects in Oran, included in the agreement signed in July 1970 between Renault and SONACOME”. The departure from Algeria resulted for Renault in 38 million francs in unpaid debts, 11 million in unamortized capital, in addition to the loss of an annual market of 15,000 cars. On July 13, 1972, Pierre Dreyfus went to Algiers. While the press talks about the suspension of the agreement on the Oran factory, Pierre Dreyfus says nothing, not even that this withdrawal comes from a mutual agreement. For its part, El Moudjahid evokes the "non-respect by the French party of the commitments made for the financing of the project". On the tarmac of Algiers, Dreyfus could have crossed MM. Leiding, president of Volkswagen, and Léonard, vice-president of General Motors, so close were their trips. Received by the Minister of Industry and Energy, Belaïd Abdeslam, then the Secretary General of the Algerian Ministry of Finance, Mahmour Aoufi, Dreyfus comes to put out the fire. The press release is laconic: “An agreement definitively settling the conflict opposing for two years the Algerian tax administration to the Renault company was signed on July 13 in Algiers”.

In 1970 Renault then covered 80% of the passenger car market in the country. In 1969, 11,290 cars were produced.

However in 1975, Algeria, which was looking for new options to revive the country's economy, once again took up ties with Renault and other car brands such as Mercedes, VW, Simca, Peugeot and Citroën. This time if Algeria realizes a specification requiring an integration rate of 60% minimum which does not thrill the car brands which find it too restrictive and high development costs which make the cost price too high for make production profitable. You know the rest, nothing will happen until November 2014 with the opening of Renault Algérie Production's new SKD (Semi Knock Down) assembly plant in Oued Tlelat d'Oran.

This is the start of a new story.


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