In a bid to reduce its production running costs and shed its overwhelming reliance on Europe, PSA Peugeot Citroen, the second largest automaker on the Old Continent disclosed recently it would construct a 557-million-euro ($630 million) assembly facility in Morocco.
The French carmaker was last year flirting with bankruptcy but since it has been saved by an infusion of capital from China’s Dongfeng and the French state, alongside smaller investors and brought a new top management structure, thinks have been looking (financially) brighter. Under its current strategy to drop production costs and reduce its over reliance on Europe’s auto market, the automaker follows domestic rival Renault in setting up a Moroccan factory, with the new site located near the coastal city of Kenitra. The new plant there would cater for the production of small and subcompact models for Africa and the Middle East starting 2019, according to chief executive officer Carlos Tavares, who signed the investment at Morocco’s royal palace in Rabat. Initial production capacity would be of 90,000 units, with the factory able to increase output to 200,000 if positive conditions are met. The plant endeavor has been rumored on numerous occasions since late last year and follows PSA’s plans to drop its reliance on the Western Europe’s stagnant auto market and increased production expenses.
Peugeot said the site would use around 60 percent of locally sourced components, with plans to increase the tally to 80 percent as the supply chain expands and reach a total of 4,500 employees at the maximum production capacity of 200,000 vehicles. “Africa and the Middle East are historic markets for PSA and the region is expected to become a profitable driver of our internationalization,” commented Tavares.