French giant automaker Renault on Thursday inaugurated a giant factory in Morocco that will be capable of producing 400,000 cars a year from next year.
Most of the production will be destined for export markets. Renault’s total investment in the plant could reach €800 million to €1 billion.
The new 3 million square metre (32 million square foot) facility near Tangiers is key for the carmaker’s strategy to expand in the low-cost segment that already accounts for nearly a third of sales.
The plant had initially been planned in 2007 as a joint venture between Renault and its alliance partner Nissan, but Nissan froze its participation after the global economic crisis struck in 2008.
Lower labor costs in Romania helped Renault position Dacia in the low-cost segment, and company executives say Morocco will help keep it competitive as average monthly wages there are much lower at around 250 euros ($330) per month.
The new Tangier plant is expected to generate 6000 direct jobs and around 30000 indirect jobs in the northern region of Morocco.
The factory has sparked controversy, due to the French political debate about creating jobs within the country, Reuters reported.
“The question of building this factory in Western Europe didn’t even arise,” Renault Chief Executive Carlos Ghosn said, Reuters reported.
“That would have been incompatible with the concept” of low-cost vehicles, he then added.