In the bustling city of Tangiers, a unique train journey takes place not for passengers, but for cars.
Three times daily, a train loaded with Renault cars from a factory just outside the city snakes its way to the Mediterranean Sea, where these vehicles are shipped off to European markets. In less than twenty years, Morocco has turbocharged its car production from almost zero to becoming the largest in Africa, thanks to smart business incentives and significant investments in infrastructure like the freight railway line.
Today, it even outpaces giants like China, India, or Japan in car exports to Europe, boasting an impressive annual production capacity of 700,000 vehicles. As the global auto industry pivots to electric vehicles (EVs) and embraces automation, Moroccan officials are keen to keep their country in the fast lane. They're actively vying for electric vehicle projects to ensure Morocco remains a key player in the automotive sector.
However, it's still up in the air whether this industrial success story can adapt and thrive in the rapidly evolving landscape. The automotive sector is a powerhouse in Morocco, contributing 22% to the nation's GDP and generating $14billion in exports. Over 250 companies involved in car manufacturing or component production have set up shop here.
Renault, which dominates as Morocco's biggest private employer, has even nicknamed the country "Sandero-land" due to the massive production of its Dacia Sanderos in the region. With fewer democratic checks and balances to grapple with, governmental authorities are assuring firms seeking to offshore their production to more cost-effective regions that they can secure authorisation for new factories and wrap up construction in a mere five months.
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"We didn't export one car 15 years ago. Now it's the first exporting sector in the country," said Industry and Trade Minister Ryad Mezzour. Mezzour said that Morocco has managed to set itself apart from other offshoring hotspots by broadening its ports, free trade zones and highways.
In a bid to attract manufacturers to rural areas outside of Tangiers, the government offered incentives of up to 35%, where Renault now makes both Clios and Europe's top passenger vehicle, Dacia Sanderos, and soon plans to initiate the production of hybrid Dacia Joggers. Factories backed by Chinese, Japanese, American and Korean corporations manufacture seats, engines, shock absorbers and wheels at Tangier's Automotive City, a vast hub for vehicle parts manufacturers. Stellantis whips up Peugeots, Opels and Fiats at its Kenitra facility.
Channeling significant resources towards fostering and sustaining an automotive sector capable of employing the nation's burgeoning youthful workforce was part of a 2014 industrialisation blueprint. With an aim to generate employment, Mezzour mentioned that he and his predecessors have given priority to offering more than just inexpensive labour to international automakers scouting new locations for vehicle and part production.
Major car manufacturers are paying their unionized factory workers in Morocco significantly less than their counterparts in Europe. Despite the lower wages, which are about a quarter of France's monthly minimum wage of 1,766.92 euros ($1911.97), these jobs still offer more than the median income in Morocco.
The automotive sector employs around 220,000 people, contrasting sharply with the over 200,000 agricultural jobs lost each year due to a six-year drought. Morocco's market for new cars remains modest, with fewer than 162,000 vehicles sold last year.
However, the government's efforts to develop an automotive industry have positioned automobiles as a key element in transitioning from a primarily agrarian economy. "I have one simple priority - not exports or being competitive. My job is to create jobs," stated Mezzour.
Abdelmonim Amachraa, a Moroccan supply chain expert, highlighted that investments in infrastructure and training are strategically positioning Morocco to attract further investment from global automakers, especially those expanding their electric vehicle supply chains. Moroccan officials are actively courting investments from major global regions including China, Europe, and the United States, aiming to become a hub for the production of affordable electric vehicles.
Notably, China's BYD, the world's largest electric vehicle maker, has announced plans to establish factories in Morocco on at least two occasions, although these plans have yet to materialize. "The important question is what can a small country do in this world," Amachraa remarked, highlighting the swift changes in global car manufacturing. "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 moves towards eliminating combustion engines within the next decade, companies like Renault are gearing up for changes in Morocco. Mohamed Bachiri, head of Renault Group's operations in Morocco, pointed out that the company's successful track record in the region makes it a prime spot for further investments, especially in electric vehicles (EVs).
He noted that the industry is poised for growth as Morocco's "integration rate" the proportion of locally sourced parts has climbed to over 65%. The presence of skilled and experienced autoworkers gives Morocco an edge over other outsourcing hubs, according to Bachiri. "We're predisposed to manufacturing cars for customers in our sphere. And the day they decide they need electric vehicles, we will," he declared.
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The government has supported public-private initiatives like a Renault-led academy that trains technicians and managers. Bachiri also highlighted Morocco's political stability and its closeness to Europe as key factors making it a secure place for investment. "It's like being on an island next door," he commented, acknowledging the instability in nearby regions across North and West Africa.
However, with the US and European nations urging their car manufacturers to bring electric vehicle production back home, Morocco's future in this sector remains uncertain. The country has always prided itself on its free market approach, avoiding tariffs and trade barriers.
However, it now finds itself under pressure as countries competing for a slice of the EV production pie implement protective measures for their domestic car industries. Western governments, who have historically encouraged developing nations to adopt free trade, are now introducing policies to bolster their own EV production. Last year saw both France and the US introduce tax credits and incentives for consumers purchasing electric vehicles made in Europe or North America respectively.
Although these US incentives could potentially extend to Morocco due to an existing free trade agreement between the two nations, Mezzour expressed that they add complexity to the global supply chain and occasionally make his role more challenging.
"We're living in some kind of new age of protectionism," Mezzour stated. "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."
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