German automotive giant Volkswagen AG is considering Morocco as a potential location for a new industrial facility in Africa as the carmaker reassesses its regional manufacturing strategy, Volkswagen Group Africa CEO Martina Biene said during the company’s Indaba conference in February.
Martina Biene said vehicle production in South Africa has stagnated at about 610,000 units a year, well below the country’s target of one million vehicles annually. Lower output limits the scale needed to sustain large industrial investments and support a competitive supplier network.
Morocco’s automotive industry reached a historic milestone in 2025 by producing over one million vehicles, surpassing South Africa to become the leading automotive manufacturing hub on the continent.
South Africa’s domestic market has weakened. Locally manufactured vehicles account for about one-third of total sales, down from more than half in the mid-2000s, as imports increasingly dominate the market.
The global shift toward electric vehicles (EVs) is creating additional pressure. South Africa’s production base is largely focused on internal-combustion engine vehicles, leaving it exposed as Europe tightens carbon-emissions regulations and accelerates the transition to electric cars.
Meanwhile, Morocco is emerging as a possible alternative manufacturing location. The country offers a stable energy supply, proximity to European markets, and a rapidly expanding automotive ecosystem oriented toward exports.
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