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Rabat – Morocco is home to an “exemplary” domestic automotive industry, with manufacturing gradually moving towards complex components with high added value, says the 2023 UNCTAD report on Economic Development.
Published this week, the report showcases an overview of the evolution of Morocco’s automotive industry as a case study for Africa’s potential to emerge as a future global manufacturing hub.
Since 1957, the automotive sector in Morocco has undergone a transformation from merely assembling vehicles (Societe Marocaine de constructions automobiles) to full-fledged production, the report explains.
In 2021, the country manufactured a total of 403,007 units, of which $8.3 billion worth were exported, with $3.4 billion accounting for finalized vehicle exports.
The growth in production led to the creation of about 220,000 jobs in the industry. In addition, a network of more than 230 tier 1 and 2 suppliers emerged, contributing to a local integration rate of 60%.
Morocco positioned itself as a prominent production hub, attracting various major groups like German Motor Distributors, Renault, Snop (parts and components supplier), Stellantis Sumitomo Electric Wiring Systems (technical systems and components), and Yazaki (the world’s largest wiring harness manufacturer).
The country’s automotive industry reached a significant milestone as the focus of manufacturing is shifting toward intricate high-value components, including engine manufacturing, engineering, as well as research and development. The country also produces around 40,000 to 50,000 electric vehicles annually.
However, since domestic vehicle registration remains low (175,435 units in 2021), the primary orientation for vehicle assembly is the European market.
Renault, for instance, exports the majority of its production despite having the largest assembly plant with a capacity of 400,000 units. The Citroen Ami, produced in the Moroccan city Kenitra, emerged as Spain’s best-selling vehicle in 2022.
Read also: Automotive Industry Exports in Morocco Soar to $11 Billion in 2022
In addition to attracting European manufacturers, X-Electric Vehicle (XEV) of China announced plans in December 2022 to manufacture electric cars in Morocco for the Italian market.
According to the UNCTAD report, Morocco’s success in attracting multinational companies and fostering local content can be attributed to factors such as substantial investment in infrastructure, establishment of special economic zones with tax exemptions and incentives, and its proximity to Europe.
Government policies like the Industrial Acceleration Plan 2014–2020, along with the creation of industrial parks and automotive cities (Kenitra and Tangier), have nurtured the automotive ecosystem. The nation’s integration into the global economy through free trade agreements has further solidified its attractiveness to investors, the report adds.
The country’s engineering and research and development capabilities have grown, including the establishment of a regional technical center by Stellantis and Africa’s first automobile testing center.
Morocco’s ambition is to achieve an annual production of one million cars by 2025 while raising the local integration rate to 80%.
As of 2020, it already possessed an annual production capacity of 700,000 vehicles. The government’s strategies aim to enhance local integration, expand industrial activities, upgrade the value chain, facilitate technology transfer, and diversify export markets.
According to UNCTAD’s report, overcoming these challenges could involve increasing involvement from small and medium-sized domestic enterprises in the assembly phase, which is currently limited.
The report further recommends Morocco diversify destinations of vehicle export to ensure sustained growth and supply chain stability.
