Agadir Technical Unit Code : rap_etat_lieux Study on the components and spare parts industry and motor vehicles assembly activities in the Arab-Mediterranean Free Version: 01 Trade Agreement Member Countries, known as the Agadir January 2008 Agreement (JORDAN, TUNISIA, EGYPT, MOROCCO) Object : FINAL REPORT Page 1 of 208 BU : Business Strategy Study on the components and spare parts industry and motor vehicles assembly activities in the Arab-Mediterranean Free Trade Agreement Member Countries, known as the Agadir Agreement (JORDAN, TUNISIA, EGYPT, MOROCCO) ******** FINAL REPORT By Adnane BERBACHE (Ucotra Consulting) and Bruno DE CENIVAL Confidential Agadir Technical Unit Code : rap_etat_lieux Study on the components and spare parts industry and motor vehicles assembly activities in the Arab-Mediterranean Free Version: 01 Trade Agreement Member Countries, known as the Agadir January 2008 Agreement (JORDAN, TUNISIA, EGYPT, MOROCCO) Object : FINAL REPORT Page 2 of 208 BU : Business Strategy TABLE OF CONTENTS PREAMBLE 6 METHODOLOGY 9 FIRST PART ANALYSIS OF THE AGADIR AGREEMENT 10 General background 11 Specificities of the Agadir agreement 12 Opportunities of the Agadir agreement 15 Constraints pertaining to the Agadir agreement 27 Articulation of the agadir agreement with other free trade agreements 27 WORLD AUTOMOTIVE INDUSTRY 29 Global automotive market 30 Presenting major manufacturers and their trends 34 Reminder of the automotive chain value 38 Presenting major equipment suppliers and their trends 43 PRESENTATION OF THE AGADIR AGREEMENT MEMBER COUNTRIES 47 MOROCCO 49 Analysis of domestic demand Market regulation Analysis of supply Swot analysis TUNISIA 64 Analysis of domestic demand Market regulation Analysis of supply Swot analysis EGYPT 76 Analysis of domestic demand Market regulation Analysis of supply Swot analysis JORDAN 85 BENCHMARK ANALYSIS 88 The Asean agreement 90 Turkey 93 POSITIONING OF THE AGADIR AREA COUNTRIES 99 The position of the automotive industry of the Agadir agreement member countries at the 100 international level Map of the components manufactured in the Agadir countries 101 By Adnane BERBACHE (Ucotra Consulting) and Bruno DE CENIVAL Confidential Agadir Technical Unit Code : rap_etat_lieux Study on the components and spare parts industry and motor vehicles assembly activities in the Arab-Mediterranean Free Version: 01 Trade Agreement Member Countries, known as the Agadir January 2008 Agreement (JORDAN, TUNISIA, EGYPT, MOROCCO) Object : FINAL REPORT Page 3 of 208 BU : Business Strategy Typology of equipment suppliers within the Agadir agreement 103 Privileged markets of the Agadir countries 104 Strengths, weaknesses, opportunities and risks 107 SECOND PART : FORMULATION OF THE STRATEGY REMINDER OF THE AUTOMOTIVE INDUSTRY ANALYSIS IN THE AGADIR 110 AREA INTERNATIONAL CONTEXT 111 COMPETITIVENESS ANALYSIS Criteria of attractiveness of territories 123 Competitor zones 123 CEECs 124 INDIA 126 MEXICO 127 BRAZIL 128 TURKEY 130 POSITIONNING OF THE AGADIR AREA 133 Positioning of the Agadir area as compared to competitors Mapping the major opportunities for the Agadir area 135 STRATEGIC VISION FOR THE DEVELOPMENT OF THE AUTOMOTIVE 144 INDUSTRY AMONG THE COUNTRIES OF THE AGADIR AREA FIGURES 146 LINES OF DEVELOPMENT OF THE STRATEGY 150 Developing trade in the agadir area 151 Line 1: promoting the concept of the agadir area for the automotive industry 151 Line 2: developing regional partnerships 152 Line 3: developing a strategy of export by network by type of client and by geographical area 153 155 Attraction of foreign investments: manufacturers and tier 1 equipment suppliers Line 4: adapting the Agadir area value proposition to the requirements of manufacturers 155 Line 5 : building up a competitive proposition to attract equipment suppliers 156 Line 6: shedding light on the potential of the Agadir area 158 Line 7: institutional accompaniment measures 162 Contribution of the agadir agreement to the success of this strategy 163 Potential of the cumulation of the rules of origin 164 PLAN OF ACTIONS 167 APPENDIX 190 By Adnane BERBACHE (Ucotra Consulting) and Bruno DE CENIVAL Confidential Agadir Technical Unit Code : rap_etat_lieux Study on the components and spare parts industry and motor vehicles assembly activities in the Arab-Mediterranean Free Version: 01 Trade Agreement Member Countries, known as the Agadir January 2008 Agreement (JORDAN, TUNISIA, EGYPT, MOROCCO) Object : FINAL REPORT Page 4 of 208 BU : Business Strategy GLOSSARY : - Arab Mediterranean countries or MEDA Region: Algeria, Egypt, Israel, Morocco, Tunisia, Turkey, Cyprus, Malta, Jordan, Syria and Lebanon - Made in: designation Label of a product origin - WTO: World Trade Organization - DIE: Department of Foreign Investment - Learning curves: gains in costs and in productivity increase as experience accumulates - Economies of scale: gains in costs and in productivity increase as the quantity produced increases - FTA: Free Trade Agreement - NAFTA: North American Free Trade Agreement - PCs: Passenger cars - LDV: Light-duty vehicles - LDCV: Light-duty commercial vehicles - HDT: Heavy-duty trucks - NV: New Vehicles - ROW: Rest of the World - JIT: Just in time or lean manufacturing - Core competencies: core business, basic skills - Outsourcing: Outsourcing of supply - Sourcing: Supply - SUV: Sport utility vehicles 4X4 - BPW: Building Public Works - CBUs: Completely built up vehicles, new imported vehicles - CKD: Completely knocked down utility vehicles assembled locally - IUC: imported used cars By Adnane BERBACHE (Ucotra Consulting) and Bruno DE CENIVAL Confidential Agadir Technical Unit Code : rap_etat_lieux Study on the components and spare parts industry and motor vehicles assembly activities in the Arab-Mediterranean Free Version: 01 Trade Agreement Member Countries, known as the Agadir January 2008 Agreement (JORDAN, TUNISIA, EGYPT, MOROCCO) Object : FINAL REPORT Page 5 of 208 BU : Business Strategy - Station: A subsidiary of an international or multinational - Bn: Billions - USD: US dollars - API: Agency for the Promotion of Industry (Tunisia) - Amica: Moroccan Association of Automotive Industries Construction - Anima: Euro-Mediterranean Network of Investment Promotion Agencies. - EAMA: Egyptian Automobile Manufacturers Association - ASEAN: Association of Southeast Asian Nations - AFTA: Asean Free Trade Agreement - MCC: Most Competitive Country - LCC: Low Cost Country - VAT: Value Added Tax - Multi-brand: Several brands for one single product - EDI: Electronic Data Interface - R & D: Research and Development - VA: Value Added - MCI: Ministry of trade and Industry - PSA: Peugeot Citroen Ltd Company. - INS: National Institute of Statistics - EEB: Entirely exports-based company - FCR: Change of residence exception for expatriates - FOB: Incoterm cargo on board (including transportation costs) - IDA: Industrial Development Authority - CEPEX: Tunisian Centre for Exports Promotion - EU: The European Union By Adnane BERBACHE (Ucotra Consulting) and Bruno DE CENIVAL Confidential Agadir Technical Unit Code : rap_etat_lieux Study on the components and spare parts industry and motor vehicles assembly activities in the Arab-Mediterranean Free Version: 01 Trade Agreement Member Countries, known as the Agadir January 2008 Agreement (JORDAN, TUNISIA, EGYPT, MOROCCO) Object : FINAL REPORT Page 6 of 208 BU : Business Strategy PREAMBLE By Adnane BERBACHE (Ucotra Consulting) and Bruno DE CENIVAL Confidential Agadir Technical Unit Code : rap_etat_lieux Study on the components and spare parts industry and motor vehicles assembly activities in the Arab-Mediterranean Free Version: 01 Trade Agreement Member Countries, known as the Agadir January 2008 Agreement (JORDAN, TUNISIA, EGYPT, MOROCCO) Object : FINAL REPORT Page 7 of 208 BU : Business Strategy GOALS : o Boosting trade between the Agadir agreement countries in terms of components & spare parts (SP) and locally assembled vehicles; o Creating cooperation areas among countries in order to take advantage of the opportunities of cumulation of origin; o Developing exports of automotive equipment and spare parts to Europe and other destinations offering potential opportunities; o Providing development scenarios for equipment and SP industries in the Agadir countries to in order boost their competitiveness and their ability to penetrate the European market; o Promoting complementarities and the concept of comparative advantages within the quartet, thus reinforcing the competitiveness of the assembly and car components sector; o Attracting further foreign direct investment in the sector of car components as well as assembly in the Agadir Agreement member countries; o Working out pragmatic strategies that enable the four Agadir agreement member countries to integrate their activities in terms of vehicles assembly, equipment and car components and spare parts into the international market and take advantage of the opportunities offered by their respective domestic markets. By Adnane BERBACHE (Ucotra Consulting) and Bruno DE CENIVAL Confidential Agadir Technical Unit Code : rap_etat_lieux Study on the components and spare parts industry and motor vehicles assembly activities in the Arab-Mediterranean Free Version: 01 Trade Agreement Member Countries, known as the Agadir January 2008 Agreement (JORDAN, TUNISIA, EGYPT, MOROCCO) Object : FINAL REPORT Page 8 of 208 BU : Business Strategy STAKES AND CHALLENGES RELATED TO THE STUDY: The present investigation is meant to provide some answers to the following questions: o How