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CAPE TOWN - South Africa's cabinet approved an ambitious new programme on Wednesday to double vehicle production to 1.2 million units per year by 2020, a government minister said on Thursday.
The Automotive Production and Development Programme (APDP) will replace the Motor Industry Development Programme, and offer key incentives to car manufacturers including DaimlerChrysler, Volkswagen, BMW, General Motors, Nissan, Ford, Toyota and India's Tata.
The incentives in the APDP include providing "stable and moderate" import tariffs of 25 percent for completely built vehicles from 2012, and an automobile investment allowance, in the form of a direct grant of 20 percent of the project value, for new plants and machinery from 2009.
"Yes, competitiveness has improved, but it hasn't reached the kind of levels that would require of us to expect the industry to stand on its own two feet, given the global competitive environment," Trade and Industry Minister Mandisi Mpahlwa told reporters.
The motor industry is one of the biggest in South Africa's manufacturing sector, employing 135,000 people and accounting for 16 percent of the country's total exports in 2007, according to the Department of Trade and Industry.
New vehicle sales have been falling for more than a year due to higher interest rates, but motor exports are rising fast, jumping 73.8 percent year-on-year in August, albeit from a low base.
The government hopes to boost the sector to create much-needed jobs, with official unemployment at 23.1 percent.
The APDP will allow manufacturers with plant volume of at least 50,000 units a year to import a portion of components duty free, and offer production incentives as well as a company-specific allowance for training and research.
According to the International Trade Commission of South Africa, import rebate credit certificates issued under the APDP's predecessor programme cost the country 19.7 billion rand between April 1, 2006 and March 1, 2007, and 20 billion rand the previous year.
