/ 4 September 2008

New plan to boost SA vehicle production

Details of an ambitious new motor vehicle development programme that aims to boost local production to 1,2-million units a year by 2020 were unveiled by Trade and Industry Minister Mandisi Mpahlwa on Thursday.

South Africa-based manufacturers last year produced 534 490 vehicles, of which 32% were exported.

Speaking at a media briefing in Pretoria following Cabinet’s fortnightly meeting, Mpahlwa said the proposed Automotive Production and Development Programme (APDP), which revises and replaces the existing Motor Industry Development Programme, would have four key elements.

These included:

  • ”stable and moderate” import tariffs from 2012, pegged at 25% for completely built-up vehicles, and at 20% for components used by vehicle manufacturers;
  • a local assembly allowance, to be introduced in 2013, allowing manufacturers with plant volumes of 50 000 units a year or more to import 20% (reducing to 18% over three years) of their components duty free;
  • a production incentive, from 2013, in the form of a duty credit aimed at raising production, and,
  • an automotive investment allowance, to be introduced next year, in the form of a direct grant to support investment in new plant and machinery. This would amount to 20% of the project value over three years.

Mpahlwa said the local automotive industry was the largest and leading manufacturing sector in the South Africa economy, but faced a number of challenges.

These included increased competition from ”low cost and market booming regions such as eastern Europe and Asia”, as well as economies of scale in assembly, and domestic component manufacturing not being internationally optimal.

The APDP would provide the local industry ”with a reasonable level of support in a market neutral manner”.

”Long-term development of the sector will be achieved by doubling production to 1,2-million vehicles by 2020, with associated deepening of the local components industry,” he said.

The Cabinet approved the new APDP plan on Wednesday. – Sapa