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Morocco Autos Report Q1 2012
Business Monitor International, Dec 2011, Pages: 41
Business Monitor International's Morocco Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Morocco's automotive industry.
At the close of 2011, new car sales look like they have, for the time being, weathered the international economic crisis, which began in 2008 and appears unlikely to end in the near future. Excluding the bumper year of 2008, in which 120,150 new vehicles were sold, 2012 looks like it will be the strongest year of sales ever, with a predicted 114,313 vehicle sales. Sales of passenger cars are growing strongly, and did not suffer any significant decrease in velocity over the past five years. We see this trend continuing over the rest of the forecast period. What is certainly of most interest is the rate at which car ownership is growing. Here BMI sees strong, but linear, growth. This has been between 0.6% and 0.9% since 2008. BMI predicts that this growth will continue well into our forecast period. This is certainly in line with expectations of the Moroccan economy as a whole, which has benefitted from emerging as a stable area for investment in the Arab world since the beginning of the ‘Arab Spring’ in December 2010.
As for the rest of the forecast period, political interest is more than likely going to dominate any further economic advance or stumble. We foresee two issues being of key concern in the coming forecast period. The first is the potential effect of membership of the GCC (Gulf Co-Operation Council). This may well come with trade effects, potentially opening up larger markets for re-trading, and also meaning that Morocco could be used as an export hub to Europe. The downside risk is that it may erode the competitive advantage which the segment currently enjoys, particularly with relation to Eastern Europe. The second is whether political unrest will emerge in a stronger way in Morocco than it previously has. Whilst it seems unlikely that King Mohammed VI will be overthrown, as happened in Libya and Egypt, our Political Risk team does not eliminate entirely the possibility of politically based trade disruption in the short term. With these factors in mind, we still forecast average annual new car sales growth of 4% a year until 2016.
There has also been limited government intervention in the economy beyond a playing a facilitator role in recent years, in particular with regards to supporting the growth of FDI in the country. This is especially the case with the construction of Renault and Dacia facilities and the concomitant growth of the supporting industries, highlighted by the inbound Delphi group, and the limiting of international imports of second-hand cars over 5 years old. This shows a well guided regulatory framework for the industry, and it is in this light that we see overall employment in the industry growing at a steady rate of between 8mn and 10mn workers a year until 2016.
The political situation in the country and wider Middle East and North Africa (MENA) region will continue to pose the most significant risk to the business environment during our forecast period. However, BMI's MENA team believes that Morocco has one of the most stable political climates in the region. It is one of the few states where political and economic reforms have already been implemented since the mid-2000s and where the regime is likely to prevail in the foreseeable future. Potential triggers for unrest further down the line would be persistently high unemployment and failed attempts to reduce corruption.
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