Morocco Emerges as Global Automotive Manufacturing Hub, Challenging China’s Dominance

Advantageous geographical location, tax breaks, investment incentives, the presence of companies such as Renault, Valeo of France, Varroc Lighting Systems of the United States and Yazaki and Sumitomo of Japan, the signing of a series of Moroccan free trade agreements with Europe, the United States, Turkey, the United Arab Emirates and elsewhere, good infrastructure - more recently a new high-speed rail link between Casablanca and Tangier... Morocco has become an automotive hub, explains Financial Times.

"Just as you’ve seen the automotive industry settle in Eastern Europe, the next logical step is North Africa," says David Cowan, chief economist for Africa at Citibank. In 2019, Moroccan exports amounted to around $10 billion. Like any sector of activity, the health crisis had an impact on the automotive sector in 2020. This year, the sector is gradually recovering.

Another strength of Morocco is the supply strategy and the workforce. According to Marc Nassif, Managing Director of Renault Morocco, the largest manufacturer in the kingdom, the French company sources parts, from seats to axles - almost everything, the powertrains - from local suppliers. "About a third of the companies are Moroccan while the rest are foreign suppliers based in the country," he says. "For entry-level cars like the Renault Dacia brand, where labor represents a higher proportion of the vehicle cost, it’s a key incentive to set up in Morocco," explains Marc Nassif.

In the eyes of Joe Studwell, an expert in industrial policy in Asia and Africa, the growth of the Moroccan automotive industry, particularly in connection with the development of Tanger-Med, an industrial port complex, is an example of what governments can do when they decide to do so.