Until a few months ago, Seat highlighted the strong monthly growths that had its sales in Algeria. But the situation has changed drastically by a modification of the rules in the North African country, to the point that the Seat factory in Martorell will produce 14,000 cars less than it was planned until the end of the year.
The sudden change in the planning of the rhythm of production arrived at the beginning of July and, for the moment, it stays in the hope that a change of the normative change applied by the Algerian government arrives. Surprisingly for many car makers, the Algeria executive has put a stop to the brands setting a maximum of cars produced in other countries that can end up riding on plants in Algerians.
The Volkswagen group had a quota of 600 million dollars, which the company has already sold out at mid-year. In addition, Seat was particularly damaged because the Algerian government also limited the models that could be sold and only authorized Ibiza, leaving León, Ateca and Arona out.
Prioritize local production
The decision of the Algerian government has been criticized for the automotive sector because it involves changing the rules of the game that led groups like Volkswagen, Renault and Hyundai to open final assembly assemblies of cars sent in kits. The Algeria executive justifies the controversial measure arguing that it wants to favor local production.
In any case, the Algerian company Sovac, which acts as a member of the Volkswagen group in the country, announced in June that it stopped accepting orders for the exhaustion of the quota allocated to the German multinational. The effect of the dry sale of sales has been immediate to Martorell. The direction of Seat informed the committee of the suspension of all additional work shifts during the weekend, a measure that will mean the production of 14,000 cars less than expected.
"The situation has no prospects for improvement in the coming months, and for that reason the activity has been suspended during the weekends. We have to see how the months they come and respond to the situation evolve, "said Matías Carnero, president of the UGT's business committee and leader. In addition, the problem has tested the flexibility mechanism of day to increase or reduce production with the convocation of the lathes of Saturday and Sunday with very little time for notice in July. For September, the Martorell plant did not schedule turns during the weekends, as usual before.
The commercial alternatives
The braking of sales in Algeria has forced Seat to launch a B plan to "look for commercial alternatives in other countries," according to sources from the company, who remember that brand sales remain at a record level. From January to July, Seat sold a total of 369,500 cars, up 7.8%.
Algeria had become a great bet for Seat, who was commissioned by the Volkswagen group to coordinate the business in North Africa. The first four months of 2019 Seat sold 11,900 cars to Algeria, an 18.7% increase. In 2018, Seat mounted 21,825 vehicles and the entire Volkswagen group, 53,000 cars. The Algerian plant of Relizane got to have 813 workers before the quota was established.
1. What are the models that Seat mounts on the plant of the Algeria group?
At the Volkswagen plant in Algeria, Seat models the Ibiza, Ateca, León and Arona models. Of all of these, now only the first one can be sold in the country.
2. What is the role of Seat in this plant?
The Volkswagen group has left its leadership in the hands of Seat. The decision is already giving fruit. "The weight of Seat in the projects that the Volkswagen group carries out in the Iberian Peninsula and in North Africa have made Seat coordinate the interests of the group in the region," Martorell brand said recently.
3. Why is Relizane plant important for Seat?
In July 2017 the German group Volkswagen opened the plant with its local partner, Sovac. It is a plant where models of the group are assembled, with the pieces that arrive from the different factories of the consortium. Seat was the brand of the group with the highest production weight in this center. Since the inauguration of the Algerian factory until the end of 2018 60,000 vehicles have been completed, of which 28,000 are from the Seat brand.
4. What other models were mounted on the floor?
In addition to the Seat models, the Skoda Octavia and Rapid and the Volkswagen Polo, Golf, Tiguan, Passat and Caddy are also joined.
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