MOROCCO is on track to become Africa’s largest vehicle producer, surpassing South Africa, which has long held the top spot. This significant development is attributed to sustained investments in Morocco’s automotive industry, especially in electric vehicle (EV) projects, according to a recent study by BMI-Fitch Solutions.
The study, reported by Swiss newspaper Le Matin, forecasts that Morocco’s vehicle production will reach approximately 614,000 units this year, while South Africa’s production will decline to 591,000 units. This trend underscores Morocco’s robust growth in the automotive sector, bolstered by its proximity to the European Union (EU), favourable trade agreements, and efficient logistics infrastructure. Additionally, Morocco is benefiting from the interest of Chinese original equipment manufacturers (OEMs) aiming to maintain access to the European market.
Conversely, South Africa is grappling with several challenges impeding its production capabilities, including logistical issues, increased vehicle imports, and political risks. Although South Africa might reclaim its leadership by 2025, the Fitch Solutions study suggests the country will continue to face long-term pressures due to these issues, alongside emissions concerns and challenges in transitioning to electrification.
Looking ahead, Morocco’s automotive industry appears more stable, with an expected average annual growth rate of 6.8 percent in vehicle production until 2033, potentially reaching an annual output of 1.09 million units. However, this growth is not without risks. The industry’s heavy reliance on the EU market presents a potential vulnerability. To mitigate this, Morocco is diversifying its markets, expanding trade within Africa through the African Continental Free Trade Area (AfCFTA), and establishing free trade agreements with the US, UK, and Middle Eastern countries.
In contrast, South Africa faces a challenging operating environment marked by emissions issues, labour disputes, and transport inefficiencies. Despite some optimism with the ‘Government of National Unity,’ poor port management and rising competition from Chinese and Indian OEMs pose significant hurdles to local vehicle production.
Fitch Solutions predicts that vehicle production in South Africa will grow at an average annual rate of only 0.9 percent between 2024 and 2033, reaching 687,000 units annually. Investment barriers in South Africa are likely to be reinforced by policies such as the EU’s Carbon Border Adjustment Mechanism (CBAM), given the country’s dependence on coal for energy and the higher transport emissions for exports to Europe, hindering the transition to electrification.
This shift in Africa’s automotive production leadership highlights the necessity for adaptation in a constantly evolving global market, where sustainability, logistics, and trade relations play increasingly crucial roles.
Morocco’s rise as Africa’s leading vehicle producer not only showcases its adaptability and competitiveness in the global market but also positions it as a strategic hub for the automotive industry in the region. With strategic investments in infrastructure, a skilled workforce, and a business-friendly environment, Morocco is poised to capitalise on its growth, establishing itself as a key player in the global automotive supply chain. This success is expected to significantly boost Morocco’s economy and serve as an inspirational model for other African nations on their path to industrial and economic development.
