Morocco Autos Report Q4 2013 - New Market Research Report

Morocco's highly competitive production environment, government support towards manufacturing and its proximity to the high-volume European markets and high-growth potential African markets are main attractions for carmakers seeking for production-related investments in the country. BMI accordingly sees production in Morocco rising considerably over our five-year forecast period, with a total completely built unit production of 148,400 in 2017. Our forecast for 2013 looks set for 118,300 vehicles to be produced over the year, marking an 8.8% increase on the previous year.

However, vehicle sales segment will fail to replicate growth in the production segment. Industry estimates indicate that passenger cars sales in the country were down 7% year-on-year (y-o-y), to 59,748 units during the first half of 2013. BMI believes the fall in car sales reflects the ongoing weaknesses in private consumption. Morocco's external environment remains weak, with remittances, tourism receipts, and exports staying far below trend. Furthermore, growth in bank lending has remained anaemic. According to Bank Al-Maghrib (BAM) data, overall credit growth reached just 2.7% in June in annual terms; the pace of expansion seen thus far this year has been the lowest since December 2002. On the brighter side, BMI's outlook for the Moroccan economy has improved in recent months as we forecast 2013 real GDP growth of 4.1% this year, from 2.4% in 2012. Additionally, the HCP consumer confidence index showed a slight quarter-on-quarter improvement in Q412, following four consecutive quarters of decline.

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In view of these mixed results, we adopt a wait and watch approach until more visible signs of weaknesses in private consumption come to the fore and currently hold on to our vehicles sales growth forecast of 8% yo- y in 2013 - modest compared with the 16% y-o-y growth recorded in 2012. By the end of our five-year forecast period in 2017, we anticipate annual sales of 194,500 units.

Despite our cautious optimism for new vehicle sales in Morocco, we identify significant growth opportunities in the country's commercial vehicle sales segment in the medium and long term. We believe that a healthy pipeline of infrastructure projects, multilateral financing and a robust economic growth outlook will be factors prompting demand for commercial vehicles in the country. Scania's local subsidiary Scania Maroc claims to have sold close to 1,000 trucks in the market over the past two years, compared with the average 180 trucks it sold each year in the previous decade. This level of sales gives Scania a 22.5% share in the market.

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