Why Morocco is Becoming a Major International Competitive Auto Hub

Morocco’s plans to become a major global carmaker are progressively turning into a tangible reality. The sustained growth of its expanding automotive sector is “an inspiring success story”, draining more investments and manufacturers that enhance the country’s automotive eco-system.

The soaring exports of Morocco-made cars attests to the transition of the Moroccan economy from traditional agriculture to high-value modern competitive industrial sectors such as automotive, aeronautics, offshoring…

This bold transition is spearheaded by King Mohammed VI, the driving force of Morocco’s modernity, that is primarily meant to creating job opportunities for young graduates and securing an inclusive socioeconomic development.

The Moroccan Sovereign chaired on Monday at Casablanca’s Royal Palace the signing ceremony of 26 new projects worth over $1.4 billion investment in the car industry, widening the country’s supply chain.

The new investment projects, expected to create nearly 11,600 direct jobs, will be injected in sites specialized in aluminum wheels, dashboards, bumpers, seats and electromechanical boxes.

Some of the projects will help support and enhance the ecosystems already installed in Morocco by French automaker Renault, its rival PSA Peugeot, automotive supplier Valeo and in the wiring field.

These new major investments were unveiled one day after the announcement made by Chinese electric vehicle maker BYD to build a factory in Morocco, specialized in making battery-powered passenger cars, buses and trucks.

The BYD factory will be set up in the new Mohammed VI Tangier Tech City, which is part of a landmark project between Morocco and China to create a “North African Silicon Valley”.

BYD also plans to build batteries on the 50-hectare site to employ over 2,500 people. The Chinese company is expected to start production next year. Its chairman Wang Chuanfu was received Saturday by King Mohammed VI at the Casablanca Royal Palace.

Endeavoring to eradicate combustible engine, China is already the world’s largest maker of electric vehicles. Last year it sold 507,000, including buses and commercial vehicles, according to the China Association of Automobile Manufacturers, around 45 per cent of the world’s total. Yet Beijing has set a target to manufacture 7 million battery cars and hybrid vehicles by 2025.

In Morocco, automotive industry is gaining momentum and growing at a rapid pace due to incentives and competitive factors attracting more and more investors and car parts makers.

These factors include Morocco’s proximity to the European market, modern infrastructures, free trade zones, qualified cheap manpower, open economy and stability.

The development of the automotive industry in the country will help the Government create 90,000 jobs by 2020 in addition to the 100,000 that already exist.

The government also aspires to increase the proportion of locally produced components in exported cars from 40 pc to 65 pc by the end of the decade.

French automaker Renault operates two vehicle assembly plants in Morocco, in Casablanca and in Tangier, where earlier this year it produced its millionth vehicle since opening the factory in 2012.

PSA Group will begin building cars near the Moroccan coastal city of Kenitra in 2019.

Morocco is one of the few countries in the region, which has been able to avoid a big drop in foreign direct investments during the global financial crisis of 2008-2010 and the Arab Spring uprisings of 2011. A key to its success was marketing itself as an export base for Europe, the Middle East and Africa.

The EU and Morocco established a free trade area in 2000. The North African Kingdom also signed FTAs with the United States and several Arab and African countries.

The Moroccan government uses the combination of low inflation and low-cost labor, tax incentives, an improved transportation infrastructure as well as economic and political stability to attract automotive companies.

Inflation has risen at a rate of 1.5 percent a year for the past decade. The tax rate on companies is 0 percent for the first five years and businesses are given a big break on value added tax.
Morocco’s Tangier Med Port is already capable of handling 1 million vehicles a year. In addition, a high-speed rail line between Tangier and Casablanca is set to be operational in 2018.

All assets that contribute to make of Morocco the international competitive auto hub it has become.