Motor sector wants plan delayed
The SA motor industry has asked the government to delay the introduction of its new automotive development policy, due next January, because of the Covid-19 pandemic.
It also wants the government to relax rules governing current industry policy because it says the recent lockdown, allied to expected weakness in local and export demand for months to come, will make it impossible for many companies to achieve production targets required to earn incentives.
There has been talk for some time that the industry would not be ready to implement the SA Automotive Masterplan in January 2021.
This was confirmed on Thursday by the National Association of Automobile Manufacturers of SA (Naamsa), which said it had asked President Cyril Ramaphosa to consider postponing it by at least six months, to July 2021.
The masterplan, which will run to 2035, is intended to double employment in vehicle and components manufacturing, more than double vehicle production, increase local content in SA-made vehicles by 50% and create a black industrial class in an overwhelmingly whiteowned sector.
The strategy is based on an overhauled Automotive Production and Development Programme (APDP), in place since 2013. However, in a position paper published on Thursday, Naamsa said industry readiness for the masterplan had been disrupted by Covid-19.
Companies were too busy dealing with the immediate effect of the pandemic and “securing the survival of the industry” to look too far ahead.
Preparations were further affected by the government’s tardiness in finalising details of the updated APDP incentive regime. Naamsa said: “Internal systems amendments cannot be made in the remaining period before the effective date in January 2021.”
More pressing, however, is the need to amend the APDP as it already exists.
Its vehicle assembly allowance, which requires companies to build at least 50,000 vehicles annually to win duty credits, makes no allowance for enforced shutdowns.
When the motor industry’s five-week hiatus was relaxed at the beginning of May, some companies resumed limited production immediately but others had to wait. Nissan SA plans to restart manufacturing only in June.
Naamsa wants allowances for the whole of 2020 to be based on volumes in the second half of last year.
The government has been asked to take similar issues into consideration when allocating product rebate credits and when managing the automotive investment scheme, which allows vehicle and components manufacturers to recoup up to 35% of production-related investments.
The industry also wants extensions to deadlines by which it must submit documentation to customs and to the SA Revenue Service.
Volkswagen SA (VWSA) MD Thomas Schaefer said the concessions were necessary “to keep us all alive”. He said: “For the APDP to work, the whole system must be functional. At the moment, it’s completely skew. We can’t grow and function while the world is in limbo.”
Schaefer said VWSA was benefiting from back-orders from its main export market in the UK, and other destinations such as Japan.
Daily production at the Uitenhage assembly plant, near Port Elizabeth, was currently about 400 and he hoped this could return to the pre-lockdown level of 680 by early June.
How long this demand could be sustained was not clear, he said. VWSA exports about twothirds of production but with the local market in decline even before Covid-19, and long-term export demand uncertain, he said industry market and production forecasts could not be made with confidence.