Summary:

Early in February 2025, French tire manufacturer, Michelin, announced plans to leave Algeria after more than 60 years operating in the country. 

The French firm announced that it would close its commercial branch in Algeria due to restrictive local regulations blocking its ability to obtain an import and distribution license. Michelin stated that its tires will continue to be sold in the Algerian market by the Algerian distributor, Trad X. 

This announcement comes as Algerian and French media outlets are reporting possible closure of the Algeria operations of French automobile manufacturer, Renault.  

Reports indicate that Algerian regulation obliging automotive manufacturers to have 30% of their components fabricated locally impacted Renault’s production capacity in Algeria. Renault’s production fell from 60,000 units in 2019 to less than 3,000 in 2024. 

Diplomatic tensions between France and Algeria have hindered discussions toward a compromise, prompting Renault to plan a complete withdrawal from Algeria, according to the reports. 

Outlook: 

The tensions between France and Algeria are likely to continue worrying French businesses in Algeria as many have felt directly the repercussions of the conflict with no clear path toward de-escalation becoming clear.  

The restrictive measures on French companies are also likely to provoke French economic retaliation as many French officials are already threatening to cut economic aid to Algeria and raise customs tariffs. 

Also, doubts are rising if similar fate will face other European companies in the future as Algeria announced intention to review the broader cooperation agreement with the European Union.   

While Algeria has shown signs of openness to new foreign investment and even foreign military cooperation, the tensions with France are likely to serve as a cautionary tale as new opportunities are explored. 

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