05 Oct 2012 (45 Pages)
|
Includes 3 FREE Quarterly Updates.
Morocco, along with Algeria, is well placed to step up in North Africa as Egypt suffers from political turmoil. We believe 2012 is set to be a momentous year for the Moroccan auto industry. Renault and its Japanese partner Nissan Motor are constructing an assembly plant costing US$1.2bn in Tangier, and we believe this marks a major shift in the nature of the country’s industry and market. The plant, which will be Africa's biggest, is a response to Renault's view that African buyers will now prefer to buy new cars over new ones. The company also plans to build a factory in Algeria, but has not yet set a timetable for its construction. Renault reportedly sees Africa as a major growth market that can rank alongside the BRIC markets of Brazil, Russia, India and China. Renault Group now operates two plants in Morocco. Its sales in the country rose 22.4% in H112 and boasts a 37.6% market share.
A Moroccan DAF factory has produced the first ever locally assembled CF85. This is the first local assembly by the local firm, CFAO Motors Maroc. The plant is expected to assemble around five vehicles every week. The model is assembled from a complete knock-down kit shipped from the DAF factory in Eindhoven to the Casablanca factory. The CF85 model being assembled already has a certain popularity in Morocco, capturing 9% of the market in 2011, though CFAO Motors Marco is aiming to increase market share to 11% in 2012. The company has handled DAF marketing and sales in Morocco since 2005.
Renault has also announced that the Tangiers plant will produce another Dacia model, the Dokker - a newly designed van. In a novel move, the model will only be on sale in Morocco, before being rolled out in other markets across Europe and the world. BMI expects such developments to spur greater investment in the country’s auto industry, as a sizeable domestic components industry is now viable. Companies have already begun to respond to these changes, notably the Delphi’s decision to expand Moroccan production. BMI sees production in Morocco rising considerably over our five-year forecast period, with a total completely built unit production of 70,545 in 2016. Our forecast for 2012 looks set for 50,854 vehicles to be produced over the year. This number will largely be exported to the EU. This is notable of a sharp divergence from a sufficiency situation, where the number of produced vehicles far outstrips domestic demand.
Sales in Morocco will not grow as rapidly as production. We expect annual production growth to average 8.0% between 2012 and 2016, compared with 6.7% for sales growth.
We forecast that the reliably and steady sales growth seen in previous years will continue, with 139,132 units expected to be sold in 2012, up from 132,966 in 2011. By the end of our five-year forecast period in 2016, we anticipate annual sales of 183,390 units. The growth in sales will be largely driven by increased prosperity in the country, as well as cheaper models available from domestic production and the elimination of import taxes on European models. The effect of rising incomes is particularly important, as we expect that car ownership rates will increase from around 87 per 1,000 people to 137 per 1,000 people by 2016. However, Morocco’s economic performance has failed to meet expectations, and we have slight concerns that consumers face a challenging period. We do not expect private consumption growth in Morocco in the years ahead to reach the levels seen over the past decade. Persistently slow growth in the eurozone will weigh on the prospects for FDI and tourism - and hence employment - to some extent, while stretched government finances could lead to higher taxes and reduced spending on social services and subsidies.
That said, economic growth in 2012 is expected to come in at a respectable 3.0%, which is below the government’s target of 5.5%. The country is also particularly vulnerable to the fallout of the eurozone crisis - something that could potentially derail Renault’s plans to ramp up production in the country.
Furthermore, the Executive Board of the International Monetary Fund has approved a US$6.2bn liquidity line for Morocco to help protect the country against swings in oil prices and potential fallout from the downturn in Europe.
