As part of its overseas pivot under its new CEO, French automaker PSA Peugeot has finalized plans for its first African factory, to be located in Morocco.
The factory, which is expected to have an initial capacity of 90,000 units when it opens in 2018, comes as Peugeot works to turn around the precipitous 25 percent sales drop it experienced in 2014 in Middle East and North Africa.
After rumors of the deal broke last month, the deal was made official Friday when Morocco's King Mohammed VI signed an agreement with the French manufacturer. The investment is estimated at approximately 750 million euros ($848 million).
According to Reuters, the manufacturer plans to launch with a production capacity of some 90,000 vehicles and engines.
Located in Kenitra, about 47 kilometers from Rabat, the factory will be Peugeot's first fully owned factory in Africa, and comes after it signed an agreement with PAN Nigeria Ltd. to assemble some of its vehicles last year.
International automakers have turned to Africa, not just for the expected steady growth in sales, but also in a bid to lower manufacturing expenses.
French automaker Renault and its Japanese partner, Nissan Motor Co., already have a 1-billion-euro plant in Tangier . Renault also opened a factory in Algeria last year that has the capacity to build some 75,000 units.
The plans are part of new Chief Executive Officer Carlos Tavares' plans to continue Peugeot's aggressive push into more overseas markets. Taverares was previously at Renault before joining Peugeot last year.
Vehicles produced in the new Peugeot factory will be small, lower-budget options such as the C1, the 301 or the C-Elysée, which have already been very successful in China and have led sales growth in the Middle East.
After Peugeot saw a 25 percent decline in sales in MENA for 2014, the manufacturer's registrations jumped 18 percent higher during the first five months of 2015, year-on-year.