A dedicated freight train running three times daily from rural northern Morocco to a Mediterranean port is solely tasked with transporting hundreds of cars from a Renault factory outside Tangiers to ships bound for European markets. Strategic investments in infrastructure, such as this railway line, have propelled Morocco’s automotive industry from its nascent stages to becoming the largest in Africa within two decades. The country now outpaces China, India, and Japan in car exports to Europe and boasts an annual production capacity of 700,000 vehicles. With ambitions to lead in the electric vehicle market, Moroccan officials are pushing to adapt their thriving industry for the future. Currently, over 250 companies involved in manufacturing cars or parts are based in Morocco, contributing 22% to the national GDP and generating $14 billion in exports annually. Renault, the largest private employer in Morocco, has significantly branded the country as “Sandero-land” for producing most of its Dacia Sanderos there.
Quick Read
- Morocco Adapts for Electric Vehicles: Morocco is gearing up for the electric vehicle (EV) era, evolving its automotive industry to stay competitive globally. The sector, which is crucial for the nation’s economy, is transitioning to accommodate EV production, leveraging existing capabilities and infrastructure advancements.
- Infrastructure and Investment: The Moroccan government has heavily invested in infrastructure, including a significant rail network that supports the automotive industry from rural production areas to ports, facilitating efficient transport to European markets. This infrastructure has been pivotal in transforming Morocco into Africa’s leading car exporter.
- Focus on Electric Vehicle Production: With the global automotive industry shifting towards electric vehicles, Morocco is positioning itself to attract investments for EV production. The government has implemented incentives and developed industrial zones to attract foreign manufacturers, preparing the sector for future demands.
- Workforce and Economic Impact: The automotive industry plays a vital role in Morocco’s economy, contributing significantly to GDP and employment. The sector offers relatively high-paying jobs compared to local standards.
- Challenges and Opportunities: While Morocco benefits from its strategic location and skilled workforce, the shift to EV production presents new challenges, including adapting to rapidly changing global manufacturing trends and competing with nations that are increasingly protective of their domestic industries.
- Global Trade Dynamics: Morocco faces challenges from protectionist trends in global trade, particularly from Western countries prioritizing domestic EV production. However, its free trade agreements, including with the U.S., offer some advantages in navigating these complexities.
The Associated Press has the story:
Morocco prepares Auto Industry for Electric Vehicle transition era
Newslooks- TANGIERS, Morocco (AP) —
A train that travels from rural northern Morocco to a port on the Mediterranean Sea carries no passengers. Three times a day, it brings hundreds of cars stacked bumper to bumper from a Renault factory outside Tangiers to vessels that transport them to European dealerships.
Business incentives and investing in infrastructure like the freight railway line have allowed Morocco to grow its automotive industry from virtually non-existent to Africa’s largest in less than two decades. The North African kingdom supplies more cars to Europe than China, India or Japan, and has the capacity to produce 700,000 vehicles a year.
Moroccan officials are determined to maintain the country’s role as a car-making juggernaut by competing for electric vehicle projects.
More than 250 companies that manufacture cars or their components currently operate in Morocco, where the auto industry now accounts for 22% of gross domestic product and $14 billion in exports. French automaker Renault, the country’s largest private employer, calls Morocco “Sandero-land” because it produces nearly all of its subcompact Dacia Sanderos there.
The government tells companies looking to outsource production to cheaper locales they can get approval for new factories and complete construction in as little as five months.
“We didn’t export one car 15 years ago. Now it’s the first exporting sector in the country,”
Minister of Industry and Trade Ryad Mezzour said in an interview with The Associated Press.
Mezzour said Morocco has distinguished itself from other outsourcing destinations by expanding its ports, free trade zones and highways. The government offered subsidies of up to 35% for manufacturers to put factories in the rural hinterlands outside of Tangiers, where Renault now produces Clios as well as Dacia Sanderos, Europe’s most popular passenger vehicle, and soon plans to start manufacturing hybrid Dacia Joggers.
Chinese, Japanese, American and Korean factories make seats, engines, shock absorbers and wheels at the Tangiers Automotive City, a large campus of car parts manufacturers. Stellantis produces Peugeots, Opels and Fiats at its plant in Kenitra.
Devoting immense resources to developing and maintaining an automotive sector that could employ a young and growing workforce was part of a 2014 industrialization plan. To create jobs, Mezzour said that he and his predecessors have focused on offering more than cheap labor to foreign automakers looking for new places to build cars and produce parts.
Major automakers pay unionized factory workers less in Morocco than they do in Europe. But even with salaries one-fourth the size of France’s 1,766.92-euro ($1911.97) monthly minimum wage, the jobs pay more than the median income in Morocco. The industry employs 220,000.
Like in many African countries, Morocco’s domestic market for new cars is small. Less than 162,000 vehicles were sold there last year. The government’s success in building an automotive industry nevertheless has made cars the tip of the spear as Morocco works to transform its largely agrarian economy.
“I have one simple priority — not exports or being competitive. My job is to create jobs,”
Mezzour said.
Abdelmonim Amachraa, a Moroccan supply chain expert, said the spending on infrastructure and training skilled workers puts the industry in a good position to lure investment from automakers looking to build out their electric vehicle supply chains.
Moroccan officials have sought investment from both East and West, trying to lure industry players from China, Europe and the United States as they now race to produce affordable electric vehicles at scale. China’s BYD — the world’s largest electric vehicle maker — has at least twice announced plans to build factories in the country that have stalled before starting.
“The important question is what can a small country do in this world,” Amachraa said, noting how rapidly global car manufacturing was changing. “We have this ability to coexist with Europe, Africa and the United States when a link can’t be found between China and the United States.”
As Europe works to phase out combustion engines over the next decade, automakers like Renault are preparing to adapt in Morocco. Mohamed Bachiri, the director of the Renault Group’s operations in the country, said the company’s record of success in Morocco makes it an attractive destination for others to invest, particularly in EVs.
He said the industry is likely to continue growing because Morocco’s “integration rate” — the percentage of parts that carmakers can source domestically — has steadily risen to more than 65%. The country also has a competitive advantage by having the experienced and skilled autoworkers that some other outsourcing destinations lack, Bachiri said.
“We’re predisposed to manufacturing cars for customers in our sphere. And the day they decide they need electric vehicles, we will,” he said.
The government has bankrolled public-private partnerships like a Renault-managed academy to train technicians and managers. Compared to comparable markets, Morocco’s political climate and proximity to Europe made it a safe investment, Bachiri said.
“It’s like being on an island next door,” he said, noting instability in neighboring countries throughout North and West Africa.
However, as the United States and European countries encourage their automakers to “onshore” electric vehicle production, it’s unclear how Morocco will fare. The country has long prided itself on being a free market that eschews tariffs and trade barriers but finds itself squeezed as countries vying for EV production advantages enact policies to protect their domestic automotive industries.
Western governments that have long pushed developing countries to embrace free trade are now enacting policies to boost their own EV production. France and the United States both passed tax credits and incentives last year for consumers who buy electric vehicles manufactured in Europe or North America, respectively.
Though the U.S. incentives can extend to Morocco because the countries share a free trade agreement, Mezzour said they complicated the global supply chain and sometimes made his job more complicated.
“We’re living in some kind of new age of protectionism,” Mezzour said. “We’re living in instability in terms of trade rules that makes it more difficult for countries like Morocco that invested heavily in open, free and fair trade.”
Mezzour said.
