Peugeot Said to Plan Its First Car Factory in Low-Cost Morocco

Renault Factory In Tangier
The existing French Renault group factory of Meloussa, near Tangier. Photographer: Fadel Senna/AFP/Getty Images

PSA Peugeot Citroen plans to build a car factory in Morocco as part of an effort to increase its sales in Africa, following in the footsteps of French rival Renault SA, two people familiar with the matter said.

The plant would initially have a capacity of fewer than 100,000 vehicles a year, and Peugeot may announce the project publicly as early as June, according to the people, who asked not to be named because the talks are private. The first Moroccan-assembled vehicles would come from the middle to lower portion of Peugeot’s product range and be sold in the region, the people said.

The move comes as Peugeot, Europe’s second-biggest carmaker after Volkswagen AG, seeks to lower its reliance on its home region. The Paris-based company sold about 60 percent of its vehicles in Europe last year. Meanwhile, Morocco is familiar territory for Peugeot Chief Executive Officer Carlos Tavares, who helped oversee Renault’s ramping up of its factory in Tangier in his previous role as the French company’s director of operations.

Pierre-Olivier Salmon, a Peugeot spokesman, declined to comment.

The new factory would be the first wholly owned and operated by Peugeot in Africa, where Jean-Christophe Quemard, one of the four members of the company’s management board, manages operations. The French manufacturer signed an agreement last year with Nigerian manufacturer PAN Nigeria Ltd. to assemble its 301 compact car in Kaduna, and eventually perhaps also the larger 508 sedan and the 308 hatchback.

Tavares has also said Peugeot will leverage its partnership with Chinese manufacturer Dongfeng Motor Corp. to boost sales in China and other emerging markets.

Sales Drop

The French carmaker’s sales in Africa and the Middle East dropped 25 percent last year to 169,400 vehicles. That was 5.8 percent of its total sales.

Once its factory is built, Peugeot would still have less than a third of the Moroccan production capacity of Renault and its Japanese partner Nissan Motor Co. The French-Japanese alliance’s 1 billion-euro ($1.11 billion) plant in Tangier builds low-cost Dacia-branded models such as the Sandero hatchback, the Dokker small van and the Lodgy wagon.

Renault also opened a factory near Oran, Algeria, late last year, which could build as many as 75,000 units a year.

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