Johannesburg - South Africa's government and motor vehicle industry agreed on Monday to new programme to help boost production in the sector, including offering incentives for expansion.
The Automotive Industry Programme (AIP) will replace the Motor Industry Development Programme, and would ensure "moderate" tariff protection, the department of trade and industry said in a statement.
The motor industry is one of the biggest in South Africa's manufacturing sector and key to creating much-needed jobs.
New vehicle sales have been falling for more than a year due to higher interest rates, but motor exports are rising sharply, jumping 85% year-on-year in July, albeit from a low base.
"This statement serves to express the common satisfaction of all stakeholders with the final details of the programme," the department said.
"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 new programme - which must still be approved by cabinet - will also allow manufacturers with plant volume of at least 50 000 units a year to import a portion of components duty-free.
It will give incentives based on a company's production value added and an investment allowance and company-specific allowances for training and research.