Johannesburg - The 50 000 unit annual production threshold in the Automotive Production and Development Programme (APDP) is to be replaced by tiered levels of production incentives, according to a local motor manufacturing executive.
The current threshold in the APDP qualifies locally-based vehicle manufacturers for incentives and benefits in terms of the programme.
Ian Nicholls, the president and managing director of General Motors sub-Saharan Africa, told Business Report last week that the current 50 000 unit annual production threshold in the programme would move to tiered levels of production incentives starting at a very low volume to encourage new entrants and moving to a much higher volume for the volume producers.
“It’s going to be graduated scale starting at a very low level. I think its 10 000 units up to 80 000 units.”
Review
“The business imperative is still that you grow your volume base so you can get economies of scale. At the end of the day, your requirement is still going to move up that volume chain,” he said.
Nico Vermeulen, the director of the National Association of Automobile Manufacturers of SA, said he did not know if tiered production level incentives were in the final APDP review proposal and stressed that volume production remained the objective of the APDP.
Vermeulen said provision had also been made for exemption from the current production threshold in exceptional circumstances.
Nicholls said the outcome of the APDP review was likely to be announced by the Trade and Industry Department (dti) within the next two weeks.
Roger Pitot, who was the advisor on the APDP review to the dti, said last week that he had no idea when the department would make an announcement about the outcome of the review, adding his contract with the department had expired at the end of April.
Pitot said he had progressively handed over his review report and recommendations from the end of last year into the first quarter of this year.
Mkhululi Mlota, the automotive chief director at the dti, said on Friday that the outcome of the review would “happen in due course”, but he could not give a definite date yet.
Nicholls said General Motors South Africa (GMSA) would be fine with the new tiered production level incentives legislation and would not need a special exemption to deal with its production volume challenges.
Exemptions
Economic Development Minister Ebrahim Patel in October granted both Nissan South Africa and GMSA temporary exemptions from the minimum annual production threshold in the APDP.
Tanya van Meelis, the chief economist at the Economic Development Department, told Business Report last month that Nissan SA and GMSA had experienced declining production volumes due to the economic slump in Europe, resulting in these manufacturers losing significant export volumes and Patel had granted a temporary reprieve to both.
Business Report