Morocco makes a success of its drive into the automotive industry

Now one of the most industrialised nations in Africa, a clear strategy has helped the country shine in global markets as a fully home-grown car pulls into market

Barbara Gibson

With a fully locally made car gearing up for its market debut, a clear industrial policy is paying dividends in what is one of Africa’s most industrially developed nations. Here’s how they did it.

Morocco makes a success of its drive into the automotive industry

Mohamed Sharki

last update on 17 May 2023

Morocco’s first fully locally made car, bearing the brand name NEO, is about to make its debut on the country’s domestic market.

The medium-sized vehicle will go up against some big-name competitors, including French-made cars from Renault, Peugeot, and Citroen, as well as Italy’s Fiat and established manufacturers from Asia.

It will be offered at a price ranging from $15,000 to $17,000, or around 170,000 dirhams in local currency.

There are not many more details about the car, with its makers keen to keep its exterior design under wraps, while also protecting their intellectual property and industrial secrets over the vehicle to prevent imitations.

Agence MAP — King Mohammed VI presides over the presentation ceremony of the first Moroccan public car model and a hydrogen vehicle prototype at a Moroccan initiative.

Nonetheless, Ministry of Industry and Trade sources have revealed that the German company Opel will make the engine. The car has reportedly passed all required technical tests and is awaiting regulatory clearance to go on sale.

This landmark launch is a big moment and comes at an important time. Morocco's vehicle industry is transitioning to producing hybrid and fully electric cars to meet new requirements laid down by European markets, where the sale of new petrol and diesel engines will be banned from 2035.

NEO’s drive into its home market at a competitive price could be a major revenue engine for Morocco’s car industry, which is currently the second biggest supplier of low-cost vehicles to EU markets.

Neo Motors' CEO Nassim Belkhayat and #NamX's President Faouzi Annajah present a model of the first Moroccan car brand and a hydrogen-powered #vehicle prototype to King #MohammedVI during a ceremony on Monday at the Royal Palace in Rabat.#NeoMotors #hydrogenPowered #Morocco pic.twitter.com/lxH0N1MO36
— Morocco World News (@MoroccoWNews) May 15, 2023

In a move that highlighted the importance both of innovation in general and the European market in particular, the Moroccan company NAMX chose the Paris Motor Show to launch a protype of a smart multi-use car called the HUV in 2022.

Big plans and big targets – one million cars by 2023

The industry is poised for three significant developments in the near future as it adapts, and aims to produce one million cars by 2023.

It is seeking to increase the proportion of Moroccan-made components to 80% from 65%. It is moving towards becoming carbon neutral via the increased use of renewable energy and green hydrogen power. And it aims to attract international investment into the sector, while attracting foreign car makers into the country.

There is work to be done to reach the target. According to the International Organization of Motor Vehicle Manufacturers (OICA), Morocco is ranked among the top 20 countries that manufacture and export the most cars, up from the 27th in the world in 2017.

Top of the rankings in the Arab world with $11bn in sales in 2022

In 2022, Morocco's exports of cars amounted to over $11bn, with sales to 71 countries, primarily in Europe, Africa, and the Middle East.

Morocco ranks at the top of the list of Arab and African countries in car production, with about 700,000 vehicles produced last year. Sales of commercial aircraft parts neared $2bn, or 21bn dirhams, with $1.9bn generated from sales of semiconductors and electronic chips.

Morocco ranks at the top of the list of Arab and African countries in car production, with about 700,000 vehicles produced last year.

The Ministry of Trade has even bigger ambitions. After the one million car milestone for 2023, it hopes two million could be exported by 2030. That depends on an economic upturn in Europe and development of other international markets.

Car sales represent a quarter of all Moroccan exports and around 15 percent of total imports, according to the 2022 report of the Moroccan Exchange Office, which oversees foreign trade.

Centres of expertise

Around 250,000 engineers and technicians work in these industries in three production areas, Tangiers, on the Mediterranean, which produces Dacia and Renault and employs half the number of workers.

Then there is Kenitra, home to Stellantis factories on the Atlantic, which manufacture Peugeot and Citroën vehicles.

Casablanca is home to the Somaca car company and is where the industry has been established for the longest, with factories dating back to the early 1960s. Initially, Somaca assembled Fiat, Simca, and other makes. Later, in the 1990s, during the privatisation of public companies, Renault acquired them.

The country's long experience of producing low-cost cars means Morocco is among the most industrialised countries in the sector according to a study by the Ministry of Economy and Finance.

The country's long experience of producing low-cost cars means Morocco is among the most industrialisedcountries in the sector according to a study by the Ministry of Economy and Finance.

To maintain its competitiveness, further innovation and transformation will be needed, with the industry moving toward greener electric engines and a future of high-tech, connected vehicles exploiting artificial intelligence to meet the changing needs of future generations. The era of fully intelligent cars is coming.

Barbara Gibson

A Moroccan part in almost every European car

There will be competition for investment, as there already is, with India and China, for the manufacture of car parts.

More than 180 international companies are operating in the free industrial acceleration zones, linked to a network of railways that reach the ports of Tangiers on the Mediterranean and Casablanca on the Pacific to supply car manufacturers or export car parts to global markets, including Japan, Germany, Britain, France, the United States.

Latest: Morocco's auto industry saw a +40% increase in exports of cars and spare parts, totaling $2 billion by the end of February 2023, compared to the same period last year. pic.twitter.com/dT5c7eTHHW
— Le Maroc moderne (@Lemarocmoderne) April 6, 2023

Almost every car in Europe contains something made in Morocco. Among the most prominent suppliers making components in the country are Delphi and Lear of the US, Hegmann of Germany and Yazaki and Sumitomo of Japan. There is also France's Valeo and Italy's Magneti Marelli.

Morocco's automotive industry got a lift from Russia's invasion of Ukraine, which drew international companies to the country, especially from Japan and the US.

Tesla became partly dependent on semiconductors manufactured in Morocco. The Japanese company Sumitomo announced fresh investments of $190mn in three regions – Tangiers, Rabat, Salé, Kenitra, and Greater Casablanca – a move worth 2bn dirhams in local currency.

The Japanese company Sumitomo announced fresh investments of $190mn in three regions – Tangiers, Rabat, Salé, Kenitra, and Greater Casablanca – a move worth 2bn dirhams in local currency.

Morocco benefits from globalisation

Data from the Italian Institute for International Political Studies (ISPI) shows Morocco is one of the few countries in the region that has harnessed globalisation, at least since 2005.

The country's investment in industrial acceleration and economic diversification and openness boosted its share of the global value of the industrial supplies sector.

ISPI found Morocco's share of integration in global value chains climbed from 7.6% to 47% percent from 2005 to 2018. Rabat attracted huge investments during the last two decades, including from the US, China, Japan, South Korea, the UK, and EU countries, including France, Italy, and Spain.

Rabat attracted huge investments during the last two decades, including from the US, China, Japan, South Korea, the UK, and EU countries, including France, Italy, and Spain.

ISPI concluded that the country's development into car making and the manufacture of aircraft parts and semiconductors took Morocco on the same industrial level as countries including Mexico, Romania, Russia, Turkey, India, and Brazil.

Barbara Gibson

From Casablanca to the skies

But it also has a geo-strategic advantage all of its own, from its location on the Mediterranean and the Atlantic, between Europe and Africa. Last year, Morocco exported $2bn worth of aircraft parts sales, involving companies such as Boeing, Bombardier, Aerospace, Safran, and EADS.

The industry has grown so much that is even said that there is no civilian aircraft that does not contain something from Morocco. And the sector has recovered after the heavy hit that the aircraft sector took from Covid travel restrictions.

So much so, there has been international dealmaking activity. Bombardier moved production from Belfast, Northern Ireland, to Casablanca before it sold its shares to the American company Spirit Aerosystems in a $225mn deal.

Many US and Canadian aircraft manufacturing units are supplied from Casablanca factories.

Success from innovation

Morocco's success has been supported by its advanced infrastructure. It has modern ports, high speed trains, and strong road connections between the north and the south.

Investment in its human capital has also been vital.

Hundreds of technical and scientific and training centres have been opened. They provide training in a range of areas from car and aircraft parts to satellites and renewable energy, as well as artificial intelligence. Many Moroccan engineers have gone on to managerial roles in these industries in major countries.

Hundreds of technical and scientific and training centres have been opened. They provide training in a range of areas from car and aircraft parts to satellites and renewable energy, as well as artificial intelligence.

The national legislative and legal framework has underpinned the success. Morocco offers tax privileges to companies working in export and offshoring.

The country has also adopted a new Investment Charter law in 2022, the fifth since independence, which offers further incentives for investors and simplifies obligations to the government.

The green challenge

It also allows municipalities and provinces to provide in-kind incentives to investors, such as land, to set up projects.

This programme is part of the new development model's plan to double the share of private investment, increase the number of export companies, diversify foreign markets and international partnerships, and develop "Made in Morocco."

It has taken the country to second place on a 2022 index tracking the level of national industrialisation run by the African Development Bank and the African Union.

Since 2010, Morocco's industrial strength has grown as the government has prioritised industry, especially the automotive industry.

The strategy faces a test over the next decade, during which there are ambitious growth targets, from international uncertainty, and climate change.

That, in particular, will push Moroccan industries to rely on green energies and to move away from carbon early. That process is likely to be among the first criteria for evaluating the success of any industrial strategy across global markets by 2030.

Morocco's most important industrial exports in 2022