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October 22 2021 7:37 PM ˚

The Arab car industry: Is it a far-fetched dream?

Arab car manufactoring
The Tangier Renault automotive plant is pictured in this undated photo taken in Morocco. (Photo: Handout from Renault)
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For decades, Arab countries have been at it trying to conceive a locally developed car, largely with little to no success, with a few exceptions.
اضافة اعلان
The Arab automobile industry is still in the process of formation, despite decades since its inception. It's considered to be an attractive industry that provides an opportunity to employ hundreds of thousands of workers, and to create export opportunities that generate profitable revenues: easier said than done. The auto industry needs a careful study that takes into account the complexities of the industry, which in order to succeed in any country needs to meet many requirements.

Among the most prominent requirements for the success of a local auto industry is the availability of local demand and volume to make production feasible and allow factories to breakeven, as well as the presence of feeding industries that supply components and spare parts that provide a reliable supply chain with competitive prices and high quality parts.

Among the most important Arab experiences in the automotive industry come from Egypt and Morocco. The first started in the 1950s with the Nasr Automotive Company, which was part of a strategy to build a local car industry.

The government-owned company used the expertise of Italy’s Fiat, and the cars were produced locally with varying amounts of local components.  However, the company’s production did not develop much over the four decades it lived through, and it eventually shuttered its doors.

The company closed due to low demand and the abolition of customs protection that benefitted the local industry before the government changed strategies. The change in laws was the result of a new openness to free international trade.  In Egypt, too, other small factories were established to assemble European, Asian, and American cars with modest local inputs.

Currently, the Egyptian government has seriously begun to study the revival of the local auto industry and has used international advisers to prepare a national strategy to manufacture electric cars and vehicles that are able to survive and compete.

If this ambitious move bears fruit — and it seems that it will — it would create a viable and prosperous car industry. Egypt is full of advantages, such as a large local market, strategic geographical location, the availability of a low-cost trained workforce and raw materials, and the presence of a supply chain.

As for Morocco, the country is currently witnessing an auto industry renaissance. It is truly an example of how to build a successful base for the industry. It has become the largest car producer on the African continent and a preferred option for global manufacturers investing in factories for production in the Middle East and Africa.

This has all been due to the success of smart strategy that attracted investors to the Kingdom of Morocco, which was able to provide a conducive environment to localize the production of a number of car models from global manufacturers, such as the French Renault. And people expect the industrial base of cars in Morocco to expand exponentially in the coming years.

In Saudi Arabia, there is an effort to build an industrial automotive base within the 2030 Vision, which appears promising and is based on solid global and economic foundations. This is particularly promising because the Kingdom and its market enjoy basic industrial requirements like a large domestic market and the availability of raw materials, energy, infrastructure, and strategic location.

Algeria also has modest experience with creating an automotive industrial base, lead by government investment and with collaboration from global manufacturers, the industry is still taking its first steps, and thus, it’s still too early to judge.

Tunisia has some success in the automotive industry, mainly in supplying components to global manufacturers, as well as a couple of locally grown private sector companies that are trying their best to survive in their market: a brave effort that requires more public support.

Realizing the dream of building an Arab car industry is not impossible, but it requires careful implementation and a well-studied strategy to lead to success and continuity.

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