Morocco is poised to become Africa’s largest vehicle producer, overtaking South Africa, which has long been the continent’s undisputed leader. This significant breakthrough is due to continued investments in the Moroccan automotive industry, with a particular focus on electric vehicle (EV) projects, according to a recent study by BMI-Fitch Solutions.
As reported by Le Matin, the study projects that vehicle production in Morocco will reach approximately 614,000 units this year, while in South Africa it will fall to 591,000 units. This trend highlights sustained growth in the Moroccan automotive industry, driven by its proximity to the European Union (EU), existing trade agreements and efficient logistics infrastructure. In addition, the Moroccan industry benefits from the interest of Chinese original equipment manufacturers (OEMs), which seek to maintain their access to the European market.
On the other hand, South Africa faces significant challenges that are holding back its production. These include logistical problems, an increase in vehicle imports and political risks. While it is expected that vehicle production in South Africa could regain leadership by 2025, the Fitch Solutions study indicates that the country will continue to face long-term pressures due to these issues, as well as emissions and challenges in the transition to electrification.
South Africa’s Cyril Ramaphosa is sworn in for his second term as President of South Africa at the Union Buildings in Pretoria on 19 June 2024 – PHOTO/Kim LUDBROOK/POOL/AFP
The long-term outlook for Morocco looks more secure, with a projected 6.8% average annual growth in vehicle production until 2033, which could bring annual output to 1.09 million units. However, this growth is not without risks. Morocco’s automotive industry is highly dependent on the EU market, which could represent a vulnerability. Despite this, Morocco has taken steps to diversify its markets, including expanding trade in Africa through the African Continental Free Trade Area (AfCFTA), as well as free trade agreements with the US, UK and in the Middle East.
In contrast, South Africa faces a less favourable operating environment, marked by challenges related to emissions, labour, trade and transport issues. Although there has been renewed optimism for the South African automotive industry with the “Government of National Unity”, poor port management and increasing competition from Chinese and Indian OEMs, both domestically and internationally, pose serious challenges to local vehicle production.
Production line in the new second phase of Renault’s Tangier plant – AFP/FADEL SENNA
Fitch Solutions predicts that vehicle production in South Africa will grow at an average annual rate of only 0.9% between 2024 and 2033, reaching an annual volume of 687,000 units. Barriers to investment in South Africa will be reinforced by policies such as the EU’s Carbon Border Adjustment Mechanism (CBAM), due to the country’s reliance on coal for energy and its geographical location, which increases transport emissions for exports to Europe and slows the transition to electrification.
This shift in the leadership of automotive production in Africa underlines the need to adapt to a constantly evolving global market, where factors such as sustainability, logistics and trade relations play an increasingly crucial role.
Moreover, Morocco’s advancement as a leader in African automotive production not only highlights its ability to adapt and thrive in a competitive global market, but also underlines its potential to become a strategic hub for the automotive industry in the region. With a combination of infrastructure investment, skilled labour and a business-friendly environment, Morocco is well positioned to capitalise on its growth and establish itself as a key pillar in the global automotive supply chain. This success will not only boost the Moroccan economy, but could also serve as an inspirational model for other African countries on their path to industrial and economic development.
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Publish date : 2024-07-27 06:00:00
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