Overview

Automotive sales and services represent one of Tunisia’s major economic sectors.  Vehicles are not fully manufactured locally, but Tunisia does have a small car-assembly industry.  The GOT utilizes a strict quota system that caps the number of vehicles allowed into the country annually.  The quota thresholds take into consideration Tunisia’s trade deficit, market demand for new vehicles, and investment arrangements among foreign carmakers and domestic parts manufacturers.  As of 2012, all vehicles older than five years, including heavy trucks, have been prohibited entry.  Tunisian customs applies a graduated tax on all vehicle imports that rises with vehicle age up to the five-year limit.

The total number of passenger cars in circulation is around 2 million.  In 2021, sales of new passenger cars and pick-up trucks totaled 61,659 vehicles, a 24% increase compared to 2020, but the number of vehicles sold in the market is much higher, due to imports by private individuals.  The Tunisian automobile market has been historically dominated by European brands, however, the total market share of the 20 Asian brands represented in Tunisia, such as Toyota, Kia, Hyundai, Suzuki, Haval, and Geely, reached 58.8% in 2021.  Both GM and Ford are present, though market share for U.S. cars remains under 10%.  The market for hybrid powertrain vehicles is still undeveloped; thus far only Toyota, Kia, and Hyundai offer hybrid car models in Tunisia.  In January 2020, the former British brand Morris Garages (MG), now owned by the Chinese group SAIC Motor, received Tunisian government authorization to market the first 100% electric car in the country.  In 2021, Hyundai also launched a new electric car model in Tunisia.  French multinational Total Energies launched the first public charging station for electric vehicles in Tunis and intends to install them at all its filling stations in the capital and surrounding suburbs.  National Petroleum Distribution Company (Agil) and Tunisian power utility STEG agreed to establish a pilot of 10 charging stations for electric cars located in the country’s six largest cities.

Effective January 2022, the GOT implemented a 50% customs duty reduction on hybrid cars and a full duty exemption on electric vehicles to encourage the expansion of the sector.  However, the lack of charging station infrastructure, little after sales service know-how, and the relatively higher prices of the vehicles compared to combustion-engine still hamper the segment’s growth.

Automobiles with large-capacity engines carry a higher consumption tax, with rates up to 277% for gasoline engines and 360% for diesel-fueled engines.  The government reduces these rates to 67% and 88%, respectively, if imported via authorized distributors.  The reduced tax scale is intended to allow the price of automobiles sold through authorized dealerships to be competitive with vehicles purchased privately overseas and shipped back to Tunisia. 

The pump price for diesel and gasoline reflects global oil prices and is comparable to fuel costs in the United States.  Tunisian drivers pay more than their counterparts in neighboring Libya and Algeria but substantially less than European drivers.  Two grades of diesel and unleaded fuel are available. 

More than 260 automotive component companies, of which 65% are totally exporting, operate in Tunisia through the entire value chain of automotive spare parts, electrical cables and wires, electronics, engine components, design, plastic and rubber, and textile and leather.  The automotive industry in Tunisia employs about 80,000 direct jobs as of 2019.   The Tunisian Automotive Association, a leading Tunisian automotive component industry trade organization, has 40 member companies.

Leading Sub-Sectors

The Tunisian market presents opportunities for mid-sized U.S. vehicles, including pickups and SUVs.  Tunisian dealers express interest in representing U.S. auto manufacturers.  There is local demand for larger vehicle assembly plants, mainly for heavy trucks (3.5+ tons), pickup trucks, and minibus vans, which could attract foreign investors.  Some Asian brands such as Geely (China), Hyundai (South Korea), Kinglong (China), Mahindra (India), and SsangYong (South Korea) are already investing in local assembly projects.  Expansion of the market for U.S.-brand vehicles will contribute to higher demand for U.S. automotive parts and components.  Dealer service departments will remain a potential profit center as well, despite the widespread availability of mechanic shops.

Opportunities

Post-revolution restructuring of the automotive sector has allowed for a more open market with more foreign brands.  U.S. manufacturers should be sensitive not only to the current European-dominated market structure, but also to the potential for new market entrants, especially from Asia.  The motorization rate in Tunisia is very low, with only 135 vehicles per 1,000 inhabitants in 2020 (a quarter of the rate in Europe).

Attracting investment in the manufacture of automobile components for export is a priority for the GOT, especially during the current economic situation marked by the exit of several investors from Ukraine.  Operations dedicated for export of automotive parts to European markets offer promise, and several U.S. companies have successfully invested in this sector.  For domestic sales, Tunisians can be very price sensitive, and the price of spare parts often trumps quality.