Volkswagen is exploring relocating part of its operations from South Africa to Morocco as the German automaker faces declining output, rising energy costs, and infrastructure challenges, according to Asharq Business, citing industry sources.
The automaker’s Kariega plant, which produced just over 610,000 vehicles in 2025, has struggled to meet the one-million-unit target.
Factors such as unstable electricity supply, the shift toward cleaner energy, and stricter European emissions standards have contributed to a slowdown in orders.
Sources say Volkswagen is now comparing South Africa with alternative manufacturing sites, including Morocco and India, as it plans long-term strategies that could extend beyond 2030.
The decisions could be shaped in 2026, a year seen as pivotal for the company’s global footprint.
The situation has intensified political concern at home. Sonja Boshoff, president of South Africa’s parliamentary committee on economic development and trade, called a possible closure of the Kariega facility a “national crisis” in a Feb. 5, 2026 statement.
Boshoff urged President Cyril Ramaphosa to intervene, warning that delays could cost jobs and weaken the country’s industrial base.
Volkswagen’s review follows broader turbulence in the South African automotive sector. Nissan recently exited the country, selling its local factory to a Chinese automaker.
Morocco’s competitive production costs, improving infrastructure, and proximity to European markets make it an appealing alternative for automakers considering relocation from South Africa.
The country’s automotive industry has grown rapidly over the past decade, drawing investment from global manufacturers including Renault, Stellantis and Toyota.
Moroccan plants now produce hundreds of thousands of vehicles each year. Local suppliers and small and medium-sized companies have increasingly integrated into global supply chains, strengthening the country’s industrial base.
The growth has established Morocco as a leading automotive hub in Africa, offering stability and expansion opportunities for companies considering relocating or increasing production in the region.
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