The redefining of global supply chains, shifts to sustainable production, and new product innovation and manufacturing are proving to be catalysts for change. While the dominance of the US, China, and Europe as automotive heavyweights is not expected to diminish in the near future, competitive hubs are taking their place on the world stage. 

In just a decade, Morocco’s automotive sector has exploded, accounting for nearly a quarter of the country’s economic activity in 2023. The country is also Africa’s largest exporter of cars. This rapid growth means Morocco is now a key production hub for foreign investors in the automotive industry, with a supply chain of 250 global players and SMEs serving automotive facilities in 75 global export destinations. 

Ingredients to build a successful industry 

The country's strategic plan estimates that production capacity will reach one million cars per year by 2025 and two million by 2030. With access to key natural resources for batteries such as lithium, cobalt, manganese, and phosphates, Morocco also aims to become a major player in the electric vehicle market. 

Morocco's strategic geographic position offers easy access to key markets in Europe, the Middle East, and Africa; this logistical advantage is emerging as a unique strength in the global supply chain puzzle that many companies are looking to solve. 

To support the automotive industry’s growth, the government has implemented policies aimed at encouraging foreign investment, such as tax incentives and streamlined bureaucratic processes. Additionally, the government has invested in infrastructure, including the creation of two main industrial platforms: the construction of a new port in Tangier, facilitating exports and a second in Kenitra, both enjoying free zone status which means companies operating in them over the next five years will be exempt from corporation tax.  Following a tax rate cap of 8.75% for the next 20 years, it is expected that investment from leading automakers in Africa will increase, thanks to financial incentives and multiple free trade agreements with the European Union and the US. This, in turn, is expected to have a positive impact on export activity in the country. 

Sustainable production a strategic objective 

In the short-term, industry growth is being seen as the primary goal, however the long-term goal is to decarbonise the industry and vehicle production to create a sustainable global hub. Investment to support this has already begun and in November 2022, the Stellantis Group announced plans to invest EUR 300 million to double production capacity at its Kenitra factory to 400,000 units. The Citroën C3 with an electric powertrain, will be one of the first vehicles to roll off the production line as part of the Smart Car Platform. Dacia have also announced that their next generation Sandero, a 100% BEV, will be built in Morocco. 

Automotive manufacturers operating in Morocco are aware that it is critical to increase and integrate local suppliers across the value chain; Renault has stated that around 60% of their final product is sourced locally, including seats and axles. However, for all manufacturers and the industry as a whole, the challenge will be progressing to sourcing high-value components locally, including batteries and ultimately, powertrains. 

Early birds will catch the worm 

Some Swedish companies are benefiting from early market entry, establishing factories and distribution hubs in the country and integrating into the wider automotive value chain. Swedish expertise, technology, and innovation is already, and will continue to be in demand as the fast-evolving market looks to leap-frog legacy production methods and evolve as a key hub in the global automotive landscape. 

What is clear is that Morocco is quickly becoming the place to be for automotive industry players looking to expand their production, sales, and diversify their supply chains.  

Are you ready to explore the potential Morocco can offer? Our local team have extensive knowledge and local networks that can help you take advantage of the country’s vast resources, strategic location, and growth potential. 

You can read more about Business Sweden in Morocco here or contact our team today to find out how we can help.