North African Countries To Be The Next El Dorado For Carmakers And Suppliers?
|   Friday, November 23, 2012
Car manufacturers as well as their suppliers are turning more and more often toward North African countries. The reason is that predictions say an increase in new car sales by more than 40 percent by 2016 will be had.

These estimates are added on top of the low cost of labor, thus making the production of vehicles and parts cheaper than those made in Western Europe, and even some parts of Eastern Europe.
Another advantage for North African plants is the proximity to Europe, a position that facilitates the transport.


By 2016 car sales in North Africa are expected to reach 930,000 units, a significant boost from the 660,000 units sold last year. The regions included are Algeria, Egypt, Morocco and Tunisia.

According to an IHS Automotive analysis, the French car maker Renault, one of the world's largest players with 2 production plants in the region, is a market leader in Morocco, Algeria and Tunisia, having a market share of 30 percent. Fellow company PSA/Peugeot-Citroen come next in line with 25 percent share, and Hyundai-Kia finish the podium on third position with a share of 5-10 percent.

Renault has consolidated its top position the moment when it opened a new factory in Tangier, Morocco in alliance with its Nissan partner. This plant is where the Lodgy low-cost minivan is made for the Renault and Dacia brands; they go on sale in Europe and other markets.

The new plant will have a capacity of 400,000 units in 2013, putting to good use the 1 billion euro (1.3 billion dollars) invested in it. The other Renault plant is found in Casablanca, Morocco since 1959, and it produced in 2011 16,051 Kangoos, 26,583 Sanderos and 14,185 Logans.

"We have a big footprint in North Africa and it is clearly one of our main markets for both Renault and Dacia," Arnaud Deboeuf, Renault's entry-range program director stated.

Renault product director Thomas Lane said the carmaker's North African presence is ideal as it serves the local markets and those in Europe too.
"North Africa and Africa in general will be major growth markets during the next couple of decades – you want to be there," said Lane.

IHS research also indicates that the principal reason the region is attractive to companies is significantly lower labor costs compared to Europe. In 2011, autoworkers in Morocco earned an average of 250 euro a month, while their Romanian counterparts earned an average of 730 euro a month.

"The majority of low-end components produced in the region find their way to French or Spanish car production," said IHS analyst Walt Madeira for Autonews Europe. "Suppliers can ship their parts to more than 20 plants in Spain and France in a few days by road. It is very quick to get those components to the plants."

Bernard Descamps, director of international development for French suppliers association FIEV says that "Not only is Morocco a very secure location for foreign companies, the government is also very welcoming for automakers and suppliers by offering tax advantages and infrastructure improvements."

But those costs will change eventually: in 2001, the average wage for the auto workers in Romania was 250 euro. Due to the remarkable success of Dacia, which has regularly been adding new models and upping production at its Pitesti plant since 2005, labor costs have also gone up.
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