German manufacturers face particularly high labor costs, averaging $3,307 per vehicle – over 31 times Morocco’s cost – due to strong labor unions and strict regulations on working hours.
The “Getting Under the Hood of Automotive Labor Cost Per Vehicle” report shows Morocco has become the strategic low-cost production center for French manufacturers, similar to Mexico’s role for American automakers over the past 40 years.
French car manufacturers now produce more than half of their vehicles outside France, with Morocco playing a critical role in this shift.
Oliver Wyman examined more than 250 vehicle assembly plants worldwide, using publicly available data and third-party sources. The study focused on labor cost per vehicle, which considers both wages and productivity – a key metric for determining an automaker’s competitiveness and profitability.
Morocco’s $106 labor cost per vehicle puts it well ahead of other low-cost manufacturing countries like Romania ($273), Mexico ($305), and Turkey ($414). China, often considered a low-cost manufacturing hub, ranks fifth with $597 per vehicle.
The report reveals strong production growth in Morocco, showing a 29% increase in 2024 compared to 2019 levels – the highest growth rate among all countries analyzed. Traditional automotive manufacturing countries show opposite trends: France (-36%), Italy (-34%), and the United Kingdom (-31%) face major production declines.
“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,” states the report.
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The analysis categorizes global automakers into four distinct groups based on labor costs per vehicle. Euro premium manufacturers like Mercedes-Benz and BMW have the highest costs at $2,232 per vehicle. EV-only manufacturers follow at $1,660, mainstream model manufacturers at $880, and Chinese car manufacturers at $585.
Labor costs represent approximately 65% of total vehicle conversion costs. German manufacturers face particularly high labor costs, averaging $3,307 per vehicle – over 31 times Morocco’s cost – due to strong labor unions and strict regulations on working hours.
The report notes a shifting landscape in manufacturing economics. “Perhaps surprising to some, China is no longer the lowest labor cost per vehicle country,” the analysis states.
“Today, lower wage rates are paid in countries, such as Morocco and Romania, and rising production volumes and productivity have pushed these new production centers into the top slots for lowest labor cost per vehicle, along with Mexico,” it adds.
This development positions Morocco as a crucial player in the global automotive industry, especially as manufacturers seek to optimize costs amid increasing competition and economic pressures, including potential tariffs between major trading partners.
The findings come from Oliver Wyman’s Harbour Report, considered the leading authority in automotive manufacturing benchmarking. The firm plans additional analyses in coming months covering tariffs, sourcing, battery electric vehicle demand, and Chinese expansion in the automotive sector.
