The Moroccan ambassador to Spain talks to AutoRevista about the key points related to the new momentum that the Moroccan automotive industry is undergoing.
AR.- What kind of influence does the automotive industry have in Morocco and what is the country’s strategy for the sector?
K.B.- Foreign direct investment (FDI) in Morocco rose to 2,810 million euros in late October 2018, 41.9% more than the same period in the previous year, reaching an annual growth rate of 9.7% over the last five years, according to Morocco’s L’Office des Changes. The same source indicates that Moroccan exports increased by 7.9% (almost 31,000 million euros) in the first 10 months of 2018 and in the case of the automotive sector, growth stands at 10.8%.
In just a few years, our country has become the largest producer on the continent with 340,000 vehicles per year (as opposed to South Africa’s 331,000), with automotive industry exports at the value of 20,000 million euros (batteries, cameras, electric cables, etc.). A year ago, 26 projects totalling 1,300 million euros were approved in the sector, including an agreement with Renault to increase local supply of components by 55%. Morocco is one of the three most up-and-coming emerging markets for the automotive sector on a global scale together with the Czech Republic and Vietnam, offering automakers greater business opportunities. In just a few years, Morocco has made the automotive sector one of the key drivers of its economy by attracting foreign investment. In 2012 it attracted Renault, which already has two production lines for Dacia models in Tangier, in addition to the factory of its subsidiary Somaca in Casablanca, where it assembles the Renault Kangoo and the Dacia Logan and Sandero. Furthermore, Groupe PSA is set to open its plant in Kenitra with initial output of 200,000 units per year.
“In just a few years, Morocco has made the automotive sector one of the key drivers of its economy by attracting foreign investment”
AR.- What kind of impact will the arrival of Groupe PSA and the strengthening of Renault’s potential have?
K.B.- The Renault-Nissan-Mitsubishi Alliance recently announced plans to modernise and double the output of SOMACA in Casablanca to 160,000 cars, as opposed to the current rate of 80,000, by the year 2022. Renault setting up in Tangier was the icebreaker that paved the way for what we know today as the Moroccan automotive industry. The automaker’s suppliers have followed their lead and also set up there. It’s got the logistics, the proximity to Europe, the Tangier-Med port and much more in an ecosystem that works perfectly.
In light of that, there is a real possibility that the Renault platform could one day manufacture for the Alliance in Tangier, as Renault has stated that the plant is fully capable of serving any brand within the Alliance.
Groupe PSA will put its first Moroccan vehicle on the market in March 2019. This vehicle was designed in Morocco by Moroccan designers and engineers, among the 1,600 engineers that work for PSA in Morocco. As a reminder, in September 2018 PSA announced that it will double the production volume of its Kenitra plant by 2020 – earlier than expected. The plant will start up as planned in 2019 and by 2020 it will have doubled in size. It will go from 100,000 vehicles in the beginning to 200,000 cars per year.
AR.- What does the arrival of the Chinese electric vehicle manufacturer, BYD, mean for Morocco?
K.B.- The Chinese giant BYD is hoping to launch its electromobility ecosystem in Morocco. An agreement was signed in late 2017 for a venture in which the Kingdom joins forces with a leading player, a pioneer in the renewable energy and electric mobility sectors. This is a great foretaste of what is to come, as production will supply the local market and be earmarked for exports. The plant must occupy an area of 50 hectares, 30 of them occupied by built structures, within the new industrial city of Tangier, with the creation of some 2,500 direct jobs is anticipated.
By way of these facilities we want to clearly position ourselves in the electric vehicle market through the development of an ecosystem that spans the manufacturing of batteries, electric monorails, and passenger vehicles, buses and trucks. The aim is to build 100,000 vehicles per year, 400 buses/trucks, 15 km of monorail beams and 100 monorail wagons.
This constitutes another step forward for our country, as part of the numerous initiatives put in place by His Majesty King Mohammed VI, with a constant commitment to the environment and actively working to combat climate change, which Morocco has been leading the way for on the African continent for years. Proof of this is seen by the fact that the Renault-Nissan Alliance plant in Melloussa, Tangier, launched in 2012, not only turned out to be the largest car manufacturing plant in the region but also the cleanest. The result of close collaboration with the international group Veolia, which was involved in the design of the facilities to prevent contamination and to make Renault Melloussa a zero-emissions factory, reducing CO2 emissions by more than 98%.
AR.- Do you think we will be able to see, in the medium or long term, new automakers setting up in Morocco?
K.B.- Morocco will soon produce more cars per year than Italy, according to a recent article in the Wall Street Journal on the evolution of the automotive sector in the MENA zone (the Middle East and North Africa). It’s worth pointing out Morocco’s status as a “principal supplier” of European car factories, in particular the Ford plant in Valencia (car seats, cables, etc.) and the SEAT factory in Martorell. The manufacturers Volkswagen, Renault, Peugeot, Hyundai and Toyota have placed great trust in our country over recent years, due to its opportunities for growth and the potential that the African continent offers.
Our efforts to attract new automakers are embodied by the International Monetary Fund’s recent recognition of our country for having designed an economic and financial model that has boosted the development of the automotive sector and the arrival of OEM and international manufacturers.
For more than a decade we have been fostering a high-quality professional training and education policy in accordance with the governmental strategies that we have been developing over the years. Today our young people are skilled, dynamic, multilingual and open to the world. We help them acquire suitable training and guidance through specialised centres that offer companies the possibility of strengthening their capabilities to achieve their quantitative and qualitative goals, such as in the case of the IFMIA training institute in collaboration with the group Mondragón.
AR.- Do you expect that, in the medium term, exports to both Europe and markets within the Mediterranean Basin and African countries will increase?
K.B.- Morocco expects to reach exports valued at 18,500 million euros by 2025 with a production volume of one million vehicles per year. The country aspires to make the automotive sector a genuine vector of development: the automotive industry has become the largest export sector, with turnover of almost 6,500 million euros in 2017, as opposed to 3,700 million in 2014, representing 44.5% of industrial exports.
Contributing to the creation of 29% of industrial jobs, the automotive sector registered the most significant job creation between 2014 and 2017 with 83,845 new positions, more than 93% of the target number established in the Industrial Acceleration Plan for 2020, with local integration of over 50% to date, which will increase to 65% by 2019 and 85% by 2023 with PSA’s new operations.
Thanks to the good relationships that we have with Europe and the continental outlook fostered by His Majesty King Mohammed VI, Morocco has become the perfect hub for the rest of Africa. This, in addition to the good response from OEM, which have placed their trust in our country, means that prospects are encouraging.
AR.- What is being done to increase the number of Tier 2 and Tier 3 suppliers?
K.B.- OEM and their suppliers are gaining strength and more opportunities. Morocco offers proven security and stability and, what’s more, it is an attractive and competitive automotive base, which acts as a gateway to Europe with an infrastructure network based on international standards. Operators are provided with visibility and it offers a highly-efficient industrial base that fulfils the expectations of investors. The focus on ecosystems provides a production method that guarantees delivery times and optimal costs.
In this context, the ecosystems that are currently organised around automakers strengthen the capacities of suppliers and create strong demand for components and equipment. Groupe PSA has committed to investing 1,000 million euros for local supply from 2022. In the case of Renault, it is currently purchasing parts manufactured in Morocco to the value of 1,000 million euros per year with the prospect of this being doubled and exceeding the goal initially set (1,500 million euros per year).
AR.- What are the sales forecasts for the local market and can it be supplied it to a larger extent from Morocco?
K.B.- Morocco has a very consolidated market that has been on the up since 2012 with 131,935 new cars registered in 2015 (+26%), 163,110 in 2016 and 168,593 in 2017. Groupe Renault leads the way with market share of 43%. We know that the new car market in the United States, Europe and China is currently experiencing a downward trend. By contrast, it is expected that the Middle Eastern/African market will grow from its current figure of 59 million vehicles to 90 million by 2040.
Renault, which has a market share of more than 40% in North Africa, has opted to build two assembly plants within a period of five years. The production volume of the factories will reach 500,000 cars per year.
“Spanish business executives have a friendly, neighbour country right on their doorstep. Morocco is a partner on the move”
AR.- What message would you like to send to the Spanish automotive industry so that it backs Morocco?
K.B.- We are convinced, on both sides of the Mediterranean, of the need to solidify our cooperation with an innovative win-win partnership, which takes into account the changes and transformations occurring in both countries, in our region and in the world as a whole. With just 14 km separating us, Spanish business executives have a friendly, neighbour country right on their doorstep. Morocco is a partner on the move that, thanks to the numerous political, economic, social and cultural reforms that have been implemented, offers great opportunities. Morocco obtained Advanced Status from the European Union in 2008, in recognition of the important multidimensional reforms that were implemented under the leadership of His Majesty King Mohammed VI.
Our sixth Constitution, approved by the Moroccan people in 2011, was the culmination of a decade of great transformation projects, considerable political openings and sustainable economic development, as well as significant social progress. Our country has carried out various projects and reforms to encourage foreign companies, particularly European firms, to set up in the country to make the most of Morocco’s strategic location, openness and connections to diverse free trade zones. Beyond this, Moroccan legislation has undergone great improvements for the purpose of stimulating free enterprise and facilitating the investment process.
From the year 2000 until the present day, Morocco’s GDP has doubled thanks to, among others, the strong diversification of the economy, attracting considerable investment in new strategic sectors for the country and its partners on an international level. Political stability, the importance of reforms and sustained economic growth continue to be the country’s greatest assets, making Morocco one of the main destinations for investment in Africa. Both Spanish businesses and those from the rest of the world find great benefits in a country that has strategies made in collaboration with the private sector, with quantitative objectives and adequate means: joint public-private steering, investment opportunities for the private sector and strict monitoring of large-scale reform plans. Morocco topped the list of the top destinations for investment in Africa in 2017, according to the World Investment Report 2018, published by the United Nations Conference on Trade and Development (UNCTAD). This year Morocco rose nine positions from 69th to 60th in the 16th edition of the Doing Business Ranking from the World Bank, with a score of 71.02 as opposed to 68.56 the year before.
Now only 10 places separate Morocco from its objective for 2021: to be part of the top 50 in the Doing Business Ranking. Morocco has been able to progress in the 2019 ranking, thanks to the culmination of four main reforms related to the simplification of procedures for creating companies, transferring property, cross-border trade and insolvency payments.
Morocco is 75th out of 140 countries with a score of 58.5 out of 100, an increase of 0.8 points in the 2018 edition of the Global Competitiveness Index 4.0 from the World Economic Forum. It has risen two places in respect to the previous year, improving its score in various strategic criterion: the quality of institutions, the quality of infrastructure, adoption of information technologies, the local market, the financial system, the size of the market, business dynamism and innovation capability.