Due to its geopolitical position and expertise in the field, the kingdom has established itself as a spearhead of the automotive industry on the continent, recording remarkable growth over the last ten years.
Morocco is rising up among the world’s largest car manufacturers, seducing internationally renowned investors to turn to the kingdom, a platform ideally located to flood the African and European markets.
For BMI, Morocco’s strategy is bearing fruit, expecting the kingdom to become the largest automotive market by the end of 2017, due to its positive macroeconomic fundamentals and increasing availability of cheaper, domestically-produced vehicles.
The research firm expect total new vehicle sales in Morocco to reach 169,298 units by the end of 2017, compared to 152,552 units in Egypt. Furthermore, BMI forecast “vehicle sales in Morocco to reach a total of 249,029 units by the end of our forecast period in 2021, compared to Egypt’s total of 170,864 units.”
With a forecasted annual average growth rate of 8.9 percent over the 201-2021 period, sales of passenger cars is expected to be the leading sector with an annual growth rate of 9.1 percent over the same period, followed by sales of commercial cares with 5.9 percent, explain BMI.
For the BMI, this bullish outlook is supported by Morocco’s strong macroeconomic fundamentals and the development of the local auto industry.
As for private consumption, a key indicator of potential demand for new vehicles, BMI expects an annual growth rate of 3.6 percent over the aforementioned period. For BMI, this growth will remain steady over the coming years, supported by strong economic growth and remittance inflows that boost household revenues.
Furthermore, Morocco’s elimination of import taxes of European models and the availability of cheaper models from domestic production will play a key role in supporting the growth of the local market.
The fall of the Egyptian automotive empire
For BMI, the difficult economic conjuncture in Egypt doomed the fate of its automotive industry, sparked by political and social tensions, the impact of high inflation, elevated interest rates, and fuel subsidy removals constrained consumer spending. This domino effect has in turn hindered sales of new vehicles, which according to BIM are expected to fall by 24.2 percent in 2017.
This political and economic turbulence “will lead to weaker growth in new vehicle purchases in Egypt when compared to Morocco,” adds BMI.
In Morocco, “this strong growth will help create greater sales opportunities for French automakers Renault and Groupe PSA,” explain the research firm, adding that it will also “make the country an increasingly attractive market to set up domestic vehicle manufacturing.”
The firm in fact expects an exodus of international automotive makers present in Egypt to Morocco, such as BMW, General Motors Co (GM) and Hyundai, “who could look to export vehicles to Morocco to support their sales volumes as the Egyptian market remains under pressure.”