Wheels of Progress: Morocco's Automotive Exports Surge in Q1 2023

With a thriving network of tier 1 and tier 2 suppliers, the Kingdom of Morocco has successfully established itself as a compelling and competitive node within the automotive value chain. Morocco is currently home to Africa’s largest automotive industry. ?According to data provided by Morocco's Office d’Echange (OE), exports from Morocco's automotive industry reached MAD 33.9 billion ($3.4 billion) in the first quarter of 2023. The monthly report from the OE underscores a significant surge of 44% in the monetary value of automotive exports when compared to the same period in the previous year.

Key Facts about Morocco’s automotive industry:

• Morocco’s automotive industry has an annual production capacity of 700,000 vehicles with a turnover of more than $8 billion.
• It is the second-largest auto exporter to the European Union
• The industry created more than 220,000 jobs between 2014 and 2021. More than 95% of companies active in the automotive manufacturing industry have more than 200 employees.
• It has attracted major equipment manufacturers§? American company Lear operates eleven production sites in Morocco to manufacture car seats and electrical systems.§? Chinese group CITIC Dicastal has built a factory in Morocco with an investment of $400 million and a production capacity of 6 million pieces per year to supply Stellantis Group.§? Bosch supplies ABS and injection systems;§??Delphi is a specialist in injectors, HP/LP pumps and cooling systems§??Continental manufactures tires and injection systems,§??Valeo manufactures electronic equipment,§??Novares is an OEM for plastic components

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Factors that have favored the growth of the industry

1.???? Morocco’s competitiveness in the automotive sector is based primarily on the establishment of public-private partnerships (PPPs)

2.???? The development of industrial and port infrastructures to international standards

3.???? Numerous public support measures for free zones (including exemption from customs duties and reduced tax rates)

4.???? The availability of renewable energies

5.???? The improvement of the logistics chain.

6.???? The availability of trained and low-cost workforce (comparatively low wages)

7.???? Morocco’s social and political stability

Within Morocco, the value chain is characterized by the notable presence of two foreign manufacturers, Renault and Stellantis. The Dacia brand under the Renault Group commands a significant 30% share of the local market. On the other hand, the Stellantis Group is part of a more integrated group, encompassing in addition to Peugeot and Citro?n, the brands Fiat, Alfa Romeo, and Opel.

Four poles have been structured around six industrial ecosystems to create an industry oriented towards the future of mobility:

• the cabling ecosystem;
• the metal and stamping ecosystem;
• the battery ecosystem;
• the ecosystem of vehicle interiors and seats

Morocco has created two industrial platforms in the Cite de l’Automobile in Tangier and the Cite de l’Automobile in Kenitra. These have been granted free zone status i.e., a total exemption from corporate tax for companies operating in these zones for five years, followed by a cap of 8.75% for the next 20 years. Over the long term, increasing investment from leading automakers in Africa and incentives offered by the government will majorly drive automotive output in Morocco.

Sources: Morocco World News| Iqra News | AMACHRAA, A. (2023).

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