“Good position”
Morocco exports more cars to Europe than China
26.05.2024, 09:21
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Less than two decades ago, Morocco had virtually no automotive industry. Now it is the largest in Africa. But now the era of electric cars is coming – with new competitors.
Three times a day, a freight train brings hundreds of cars from rural northern Morocco to a Mediterranean port. They come from a Renault factory outside Tangier and are sent to car dealers in Europe. Business incentives and investments in infrastructure like this freight rail line have helped the country transform its auto industry from virtually nonexistent to the largest in Africa in less than two decades. The North African kingdom supplies more vehicles to Europe than China, India or Japan and has the capacity to produce 700,000 cars a year.
And the government is determined to preserve the country’s position as a heavyweight automaker in the future, with Morocco eagerly bidding for electric car projects. But the extent to which it can remain globally competitive in this coming new era of vehicles with increasing automation in manufacturing is an open question.
There are currently more than 250 companies operating in Morocco that produce vehicles or vehicle components. The auto industry now accounts for 22 percent of gross domestic product and the equivalent of 12.9 billion euros in exports. French carmaker Renault, Morocco’s biggest private employer, produces almost all of its Dacia Sandero small cars – extremely popular in Europe – in the North African country. Unencumbered by many of the checks and balances of a democratic checks and balances, the government tells companies that want to outsource production to cheaper areas that they can get approval for new factories and complete construction within a short period of time – perhaps as little as five months.
“15 years ago, we didn’t export a single car. Now it’s the leading export sector in the country,” said Industry and Trade Minister Ryad Mezzour. He pointed out that Morocco has developed its ports and highways, and the government offers subsidies of up to 35 percent to producers to build factories in the rural areas outside Tangier – where Renault now makes both Clios and Dacia Sanderos.
Lower wages
Chinese, Japanese, American and Korean factories manufacture seats, engines, shock absorbers and wheels in Tangier Automotive City – a large industrial park with auto parts producers. Stellantis makes Peugeots, Opels and Fiats at its factory in Kenitra.
Putting huge resources into developing and maintaining an automotive sector was part of a 2014 industrialization plan aimed at creating jobs for a young and growing workforce at a time when foreign automakers were looking for new places to produce vehicles and vehicle parts.
Major automakers pay unionized factory workers in Morocco less than they do in Europe. But even with wages a quarter of the French minimum wage of 1,766.92 euros a month, the pay is above the average income in Morocco. The industry employs 220,000 people.
Like many African countries, Morocco’s domestic market for new cars is small. Fewer than 162,000 vehicles were sold there last year. But the government’s success in building an auto industry has nonetheless made vehicles a spearhead in Morocco’s drive to transform its largely agrarian economy. “My priority is simple – not exports or being competitive. My job is to create jobs,” Mezzour says.
“Skilled auto workers”
Abdelmonim Amachraa is a Moroccan supply chain expert. He says spending on infrastructure and training skilled workers has put the industry in a good position to attract investment from automakers looking to expand their electric car supply chains. Morocco is seeking investment from both the East and the West, trying to attract industry players from China, Europe and the United States, all of whom are keen to rapidly produce affordable electric cars on a large scale.
China’s BYD, the world’s largest manufacturer of electric vehicles, has announced plans to build factories in Morocco at least twice, but so far no plans have been implemented.
With Europe aiming to phase out internal combustion engines over the next decade, automakers such as Renault are preparing to adapt to the process in Morocco. Mohamed Bachiri, director of the French manufacturer’s operations in the North African country, says the company’s success there also makes the kingdom an attractive place for other manufacturers to invest, particularly in electric cars. The industry is likely to continue to grow as manufacturers can source a large proportion of auto parts – now more than 65 percent – directly from Morocco. The country also has the advantage of experienced and skilled auto workers, which some other outsourcing destinations lack.
But with the US and European countries encouraging their automakers to produce electric cars “onshore”, it is unclear how well Morocco will be able to hold its own. The country has always prided itself on being a free market, with no tariffs or trade barriers. But it now faces other countries taking measures to protect their domestic auto industries in order to gain advantages in the production of electric vehicles.
Last year, for example, France and the United States decided to offer tax credits and other incentives to consumers who buy electric cars made in Europe and the United States respectively. “We are living in a kind of new era of protectionism,” says Mezzour. This makes things more difficult for countries like Morocco, “which have invested heavily in open, free and fair trade.”