Morocco's Riad Motors plans Chinese vehicle plant

RABAT, May 19 (Reuters) - Riad Motors Holding, Morocco’s leading family-owned importer and distributor of heavy trucks and utility cars, will open this year the biggest China-made vehicle assembly plant in North Africa, Riad said on Monday.

The Rabat government wants to make Morocco into a hub for the car industry, as it maximises its free trade agreements with the European Union and United States and several Arab countries.

“The company will invest 275 million dirhams ($37.41 million) in the assembly plant. The plant will go on stream by the end of June, 2008,” it said in a statement.

The plant aims to produce 5,000 vehicles, mainly small trucks, per year to supply the Moroccan market before expanding output later to export to West Africa, Middle East and Asia.

Riad agreed deals with Chinese vehicle-maker Sinotruk 3808.HK, Mudan and Baw, to supply the assembly plant to be located in Settat region, near Casablanca -- Morocco's commercial capital.

“We selected these three Chinese firms because we want to ensure supply security. The three companies are linked to the Chinese army and produce vehicles for the Chinese armed forces. That gives us a guarantee to supply the plant,” Riad Chief Executive Officer Abdelaziz Azzam told Reuters.

Azzam and other vehicle industry officials said they believed the plant would be a breakthrough for Chinese vehicle industry in Morocco and North Africa.

“It would be the biggest assembly plant for Chinese vehicles in North Africa,” said Azzam. Riad Motors is owned by the Riad Sahyoun family.

“It is part of a well-thought-out strategy by Chinese vehicle industrialists to win a foothold in Morocco and expand in Maghreb and other markets in Africa,” said a senior Moroccan vehicle industry official, who did not want to be named.

French carmaker Renault RENA.PA signed a deal with Morocco last September to build a new factory that would be able to produce up to 200,000 cars a year from 2010, and eventually up to 400,000 a year.

The planned investments in manufacturing capacity were estimated at 600 million euros, with a first phase of 350 million euros. Further specific investment of 200-400 million euros would be made according to the type of vehicles produced.

Renault already has a major presence in Morocco, where it produces the low-cost Logan car.

Its plant in Morocco will manufacture cheaper cars for developing markets under the Renault/Dacia brand and small utility vehicles under the Nissan brand, with 90 percent of the plant output for export. (Reporting by Lamine Ghanmi; Editing by Louise Ireland)