The factory has capacity of up to 200 units a day and started with build of the VW Golf, Caddy, Seat Ibiza and Skoda Octavia. VW's Polo and Skoda's Fabia will be added in 2018.
VW brand CEO Herbert Diess said: "The African continent offers considerable growth opportunities for the group. With the new plant in Algeria, we are expanding the presence of brands in North Africa together with SOVAC. We are bringing leading modern technology to Africa, especially with the Golf. In Africa too, the VW brand will write a major new success story."
The main investor is Sovac which, as majority shareholder, also provides the factory – officially Sovac Production – with its managing director. VW Group holds a minority stake in the joint venture company. Following the signature of the contract in November 2016 and a construction period of only 200 days, the plant opened with four assembly lines.
Sovac CEO Mourad Oulmi said: "We have been the official representative of the group in Algeria for more than 10 years. Today, a new era in our partnership has started. From now on, our factory will be part of the group. Together we will create an industrial network which will not only include vehicle production but also a supplier structure meeting the requirements of local production."
Seat chairman Luca de Meo said: "For the first time in the history of our brand, we are making cars outside Europe. One of our objectives is to make the brand more international and North Africa is an appropriate venue for this step. The Ibiza is a best seller in Algeria and assembly at the new plant will help us significantly increase our sales. For Seat, it is an honour to lead this group project, also in terms of the production volume."
Algerian production, logistics and quality assurance employees were trained on site by group brand staff. Algerian managers also received training for several months at group European production locations.
"This 'train the trainer' programme provides practical qualifications for foremen and managers, allowing them to explain standardised procedures to their employees and train them in these procedures," VW said in a statement.
The plant has started with 550 workers but plans eventually to employ 1,800. Additional jobs will be at suppliers and logistics service providers.
Skoda CEO Bernhard Maier said: "The markets of North Africa, including Algeria, offer considerable growth potential. This is why we are especially pleased to be able to start production of the first models in Africa. We are convinced we will be able to strengthen our presence in this region through this development."
VW Commercial Vehicles production chief Josef Baumert said: "With the new production facility here at Relizane, we are opening up new markets and creating local jobs."
VW shipped its first vehicles from Germany to Algeria in 1952. Early 1970s, exports reached several thousand units a year.
Sovac has imported VW into Algeria since 2001, later adding commercial vehicles, Audi, Seat, Skoda and Porsche. The dealer network is about 90 outlets employing 1,600. In 2015, about 30,000 retail sales were made.