Plan to boost car industry

Brendan Boyle

Brendan Boyle

A new incentive plan to protect the country's most valuable manufacturing sector should see car production doubled to 1,2million vehicles a year by 2020, Mandisi Mpahlwa, the minister of trade and industry, said yesterday.

After months of delays, government finally revealed details of a new motor industry support package after the expiry next year of the existing Motor Industry Development Programme (MIDP).

He said the new scheme would combat the proliferation of small car assembly plants by giving the strongest support to bigger manufacturers and should help to cut the cost of cars in South Africa.

Johan van Zyl, president of the National Association of Automobile Manufacturers of SA (Naamsa) said the industry was pleased with the package, though the plan to double production was ambitious.

"There is no doubt that the new programme will stimulate production of motor vehicles and automotive components and encourage further investment in the industry and assist the process of stabilising and creating employment over time," he said.

The first phase of the new scheme would kick in next June with subsidies of up to 20percent for new investments in the automotive industry, Mpahlwa said.

He said Finance Minister Trevor Manuel would announce initial allocations to the 12-year programme in his medium-term economic forecast on October 21, but said the cost of the new scheme would be similar to the investment in the current programme.

Mpahlwa said there would be a "tick up" when other aspects of the programme were implemented in 2013 and spending would then decline towards the expiry in 2020, when government hoped the motor industry would "be able to stand on its own feet".

In order to comply with World Trade Organisation rules, the new incentive programme will apply equally to production for the local market and for export.

"The revised MIDP will therefore seek to provide industry with a reasonable level of support in a market neutral manner. There will be no discrimination for products sold domestically and those exported," he said.