Sentury investing $300 million in Morocco tyre factory
On 30 December 2022, Sentury Tire shared that the company convened a board meeting to approve the “Proposal on Investing in the Construction of High-Performance Car and Light Truck Radial Tire Projects in Morocco”. In other words, the company is planning to build its third overseas factory just outside Morocco, North Africa in what will be the first Chinese tyre factory in Africa. Sentury plans to invest just under US$296.78 million in constructing the Morocco tyre plant, which is set to have a production capacity is 6 million car and light-truck tyres a year.
The Morocco tyre factory project will be located near Tangier which situates it roughly 35km from Tangier Mediterranean Port, the largest container port on the Mediterranean coast. That position also puts the site relatively close to both Renault and Peugeot/Citreon’s respective 400,000 car a year factories. According to local tyre industry sources, those plants together offer the chance to supply up to 2 million tyres a year in, however that would also mean winning the OE approval of the well-known French car brands. In addition, to local OE tyre demand, the factory would also be well-positioned to compete for domestic replacement tyre business. CEIC data suggests that the Moroccan car parc numbers about 4 million units. So, based on an annual average replacement rate of one tyre per car per year, there is also a 4-million-unit local car tyre market to compete for.
According to Sentury documents, Morocco has a “stable political and economic environment and an excellent geographical location.” Sentury’s definition of “excellent” centres on Morocco’s logistical position, which suggests the company is planning on exporting a significant portion of production as well as the aforementioned OE and replacement market possibilities. Indeed, Sentury highlights the fact that Morocco is situated at “the hub of the three major markets of the European Union, the Middle East and Africa has an important strategic position”. And that Morocco “is closer to Europe in terms of culture, customs and social openness”. Furthermore, Morocco’s free-trade agreements with both Europe and the US will not have escaped Sentury’s attention. Specifically, European countries reportedly account for about 70 per cent of Morocco’s total import and export.
Sentury also notes that the local policy of “halving” means that the enterprise is exempted from paying corporate income tax for the first five years, and the corporate income tax is halved from the sixth year onwards. The project has also reportedly attracted “15 years of municipal tax exemption” as well as other support.
Sentury reports that it plans to pay for the project from the company’s “self-raised funds”.
Meanwhile, Sentury also announced that it intends to raise up to 4 billion yuan (£486.352 million; 549.484 million euros; US$579.104 million) in non-public funds, which will be used for the Sentury’s Spanish tyre factory, which at an annual production of 12 million car and light-truck tyres a year. However, Tyres & Accessories can report that the Spanish project’s general manager, Warren Rudman, recently left the company.