Johannesburg - There have been mixed reactions to the outcome of the review of the Automotive Production and Development Programme.
The National Association of Automobile Manufacturers of South Africa said the industry was satisfied with the outcome, but the National Association of Automotive Component and Allied Manufacturers expressed a number of concerns while welcoming the government’s support.
On Tuesday Naacam president Ken Manners expressed disappointment that the review did not yield more meaningful requirements for local manufacture of components and subassemblies.
Manners said despite the growth in vehicle assembly, real local content percentages had declined in the two years since the introduction of the APDP, especially in the manufacturing subsector and most notably at the tier two level where real employment, skills development and transformation opportunities lay.
He said the announcement of lower Vehicle Assembly Allowance thresholds might welcome new participants, but would do little to change the local content deterioration.
REDUCING THE THRESHOLD
Trade and industry Minister Rob Davies announced the implementation of a number of proposals on Sunday in an effort to sustain and grow the automotive industry while steering it towards the APDP vision of high volume vehicle production.
These included the development in 2016 of a post-APDP support framework to provide certainty in the policy environment for automotive manufacturing in South Africa after 2020; a reduction in the annual volume threshold for vehicle production from 50 000 units to 10 000 units to allow new entrants into the local industry from 2016; and the introduction of the VAA on a sliding scale from 2016, commencing at 10 percent for 10 000 units to 18 percent at 50 000 units.
A “suitable” capital incentive level will be provided for new entrants that produce less than the 50 000 annual threshold in guidelines that should be finalised by April; the production incentive for catalytic converters will be “frozen” at the 2017 level of 65 percent rather than continue the phase down; and the qualification for component suppliers to earn APDP benefits will be tightened to avoid these benefits being earned on non-core automotive products.
Davies said his department would also engage the Treasury in an effort to secure improved investment support for tooling as a means of encouraging further component localisation, but noted the overall national budget constraints.
INVESTMENTS
Manners said Naacam was cognisant and appreciative of significant original equipment manufacturer investments based on the principles of the APDP, but without any changes to the parameters for another five years, was concerned that component manufacturers would find it more challenging to compete on a sustainable basis.
Naamsa said it endorsed the governments’ continued commitment to the principle of consistency and stability in the official automotive industry development policy regime and the assurance that there was likely to be a high level of continuity between the current and planned post 2020 development programme.
“Certainty and stability in the official policy regime over the past 30 years has contributed to a number of noteworthy achievements by the vehicle manufacturing and associated industries including higher levels of vehicle production, particularly vehicle exports,” it said.
Naamsa said the proposed higher investment support for automotive tooling was an important feature of the APDP review outcome which, if implemented, would drive additional localisation, particularly of automotive components.
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