A European bank has given a €16m loan to a Moroccan car parts supplier in a bid to support the automotive industry in the country.
The European Bank for Research and Development (EBRD) lent the money to Varroc Lighting Systems Morocco, the local subsidiary of Indian automotive lighting giant Varroc Engineering.
The EBDR said the finance will allow Varroc Engineering to supply a Renault factory in Tangier and a Peugeot PSA plant in Kenitra, and to set up a research and development centre.
In 2015, Peugeot PSA signed an agreement with the Moroccan government to build its Kenitra plant, which would begin with an initial production capacity of 90,000 units-per-year at its 2019 opening. The agreement also involved sourcing 60% of its parts from local Moroccan suppliers.
Production would increase to 200,000 a year, it said, with local sourcing rising to 80%. Last week, the government confirmed it plans to produce 200,000 a year from 2020.
The EBRD began working in Morocco in 2012, and has invested more than €1.5bn in 41 projects in the North African country, it said.
Adil Chikhi, director of EBRD in Morocco, said: “Historically, the EBRD places significant importance on the automotive sector and provides its customers with an integrated and comprehensive financing and technical support package. The automotive industry in Morocco is now able to benefit from this offer.”
Varroc Lighting Systems is a global automotive supplier and manufacturer of external lighting systems for cars, based in India. Last year, it announced its plans to set up the manufacturing and product development factory in the economic free zone in Morocco’s Tangier area.
“The Morocco facility will support both local Moroccan growth as well as our customers in southern Europe,” said Stephane Vedie, CEO of Varroc Lighting Systems.