Incentives

Auto incentive plan goes to Cabinet

2 September

South Africa's new Automotive Industry Programme (AIP), which aims to stimulate local vehicle and component manufacture and encourage increased industry investment and employment, is to go to the Cabinet for approval.

Designed to replace the current Motor Industry Development Programme (MIDP), the new programme will, if approved, remain in effect until 2020.

Since December 2007, a dedicated team of officials from the Department of Trade and Industry and external experts have been engaged in an intensive technical exercise on the details of a successor to the MIDP.

According to a statement by the department this week, the draft details of the new programme have been canvassed intensively in recent months with all key stakeholders in the industry.

Trade and Industry Minister Mandisi Mpahlwa met again with stakeholders this week in a final round of consultations on the detail of the AIP, which will provide for:

Stable, moderate tariff protection.
A local assembly allowance, which will allow manufacturers with a plant volume of at least 50 000 units per annum to import a percentage of components duty-free.
A production incentive based on production value added
An automotive investment allowance and company-specific support allowances to support approved programmes in such areas as training and skills development, localisation and research and development.

According to the department, these elements form the core of the new programme, and further work will be done to investigate the possible inclusion of certain components for medium and heavy commercial vehicles.

"All stakeholders are satisfied that the new programme will form the basis for sustaining growth, employment and exports of the automotive industry until 2020, in line with government's objectives, in an increasingly competitive global environment," the statement read.

These details will now be taken to Cabinet, after which the department will be able to announce the full details of the programme.

SAinfo reporter