Morocco has taken the lead as the most cost-efficient country for auto manufacturing, with labor costs averaging just $106 per vehicle, significantly lower than any other country globally, according to a new report from management consulting firm Oliver Wyman.
The report, Getting Under the Hood of Automotive Labor Cost Per Vehicle, highlights Morocco’s rise as a strategic manufacturing base, particularly for French carmakers, drawing parallels to Mexico’s longstanding role for American automakers. French manufacturers now produce over half of their vehicles outside France, with Morocco playing a pivotal role in this shift.
Based on an analysis of more than 250 vehicle assembly plants worldwide, the report uses publicly available data and third-party sources to assess labor costs per vehicle, a crucial indicator of competitiveness and profitability, factoring in both wages and productivity.
Morocco’s cost advantage far outpaces other low-cost regions, including Romania ($273), Mexico ($305), Turkey ($414), and China ($597). China, once considered the go-to destination for low-cost manufacturing, now ranks fifth.
Morocco also recorded the highest production growth among all countries in the study, with output up 29% in 2024 compared to 2019. In contrast, traditional manufacturing hubs are facing steep declines: France (-36%), Italy (-34%), and the United Kingdom (-31%).
“Morocco has become the low-cost production center for French manufacturers, much in the same way the Detroit Three automakers have operated out of Mexico for the past 40 years,” the report states.
Oliver Wyman categorizes global automakers into four segments based on labor cost per vehicle: European premium brands such as Mercedes-Benz and BMW top the list at $2,232; EV-only manufacturers average $1,660; mainstream brands come in at $880; and Chinese carmakers follow at $585.
Labor costs account for about 65% of total vehicle conversion costs. German manufacturers, burdened by union regulations and limited working hours, face average labor costs of $3,307 per vehicle, over 31 times higher than Morocco’s.
“Perhaps surprising to some, China is no longer the lowest labor cost per vehicle country,” the report observes. It adds that countries like Morocco, Romania, and Mexico now dominate the rankings due to lower wages and improved productivity.
With these advantages, Morocco is cementing its role as a key player in the global automotive supply chain, especially as the industry navigates economic challenges, intensifying competition, and evolving trade policies.
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