http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.20Change: 0.39
R/$ = 11.56Change: 0.10
Au 1202.59 $/ozChange: 6.50
Pt 1205.50 $/ozChange: 5.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Oct 11, 2012

Auto component production not sufficiently incentivised – Naacam

Back
Port|Port Elizabeth|Africa|Components|System|Africa|South Africa|Automotive|Local Component Manufacturing Sector|Manufacturing|Roger Pitot
Port||Africa|Components|System|Africa||Automotive|Manufacturing|
port|port-elizabeth|africa-company|components|system|africa|south-africa|automotive|local-component-manufacturing-sector|manufacturing|roger-pitot
© Reuse this



The incentive structure of the new Automotive Production and Development Programme (APDP) did not do enough to motivate vehicle manufacturers (OEMs) to increase the percentage of locally produced components they use on vehicles rolling off their assembly lines, said National Association of Automotive Component and Allied Manufacturers (Naacam) executive director Roger Pitot on Thursday.

Speaking at the South African Automotive Week, held in Port Elizabeth, Pitot said the APDP retained the duty-offset system of the Motor Industry Development Programme (MIDP) it would replace in 2013, whereby OEMs cash in their benefits by importing vehicles and components at lower duty rates, thereby providing little or no protection to component makers in South Africa as there was “effectively no import duty paid on components”.

“The APDP is still a duty rebate system. So, the more OEMs export and add value, the more they can also import,” said Pitot.

He noted that high enough vehicle exports – such as 80% of vehicle production from a plant - could ensure that OEMs could import all their component requirements duty-free.

Why would they then source their components locally, asked Pitot.

He added that OEMs had, from 2009 to 2011, imported R108-billion worth of components and subcomponents, while duties paid on these were R446-million, or 0.41%, compared with the R21-billion, or 20% which would have applied without the MIDP duty rebate.

Pitot also emphasised, however, that Naacam regarded the APDP’s production incentive, which rewarded local value addition, as a positive opportunity for the local component manufacturing sector.

He said real local content on locally produced vehicles was around 35% compared with the 55% to 60% often quoted, as the imported content of locally made parts had to be substracted first.

“The correct way is to measure the total component cost, less [the value of] all imports of components, subcomponents and materials,” he said.

“Many tier-one [component] suppliers still import substantial amounts of materials and subcomponents.”

Pitot said a bigger production incentive under the APDP would assist in curbing this trend. It would also promote the expansion of “sunrise type” of component industries in South Africa, seeing to the increased production of parts currently not flourishing under the MIDP’s incentive structure.

“Naacam believes the Department of Trade and Industry must relook the APDP mechanisms as soon as possible to ensure it’s an appropriate framework for industry and government to meet its objectives, namely doubling vehicle production volumes and substantially increasing local content,” he added.

When discussing general barriers to global competitiveness, Pitot noted that vehicle volume production were still low in South Africa, which constrained component manufacturers’ ability to achieve OEM demands for real cost savings.

Pitot noted that production of 100 000 units a year allowed for a far greater competitive advantage than 50 000 units a year.

“Monopolistic costs”, such as electricity tariffs, were also pushing up costs, while wage increases were not matched by productivity improvements.

Edited by: Creamer Media Reporter
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Components News
South Africa remains an important manufacturing and export platform for Ford Motor Company, says executive chairperson Bill Ford. However, he adds that other countries on the continent are “becoming interesting”, and that the US carmaker is casting its net wider for...
The localisation of automotive component manufacturing remained key to the creation of sustainable jobs in South Africa, and the Department of Trade and Industry (DTI) would continuously support industries that created such local employment opportunities, Trade and...
The new vehicle market in South Africa will probably end the year flat compared with 2013, says Standard Bank Vehicle and Asset Finance personal markets head Nicholas Nkosi. The biggest impact on this year’s sales comes from a weaker rand, which continues to push up...
Article contains comments
Article contains comments
More
 
 
Latest News
Updated 5 hours ago The Labour Court in Johannesburg has set aside the 2011-2014 metal sector wage agreement, the National Employers' Association of SA (Neasa) said on Thursday. The 2011-2014 wage deal was the result of an agreement between the Steel and Engineering Industries...
South African cement firm PPC on Wednesday named a mining industry veteran as chief executive, ending a three-month leadership vacuum that has hit its shares. PPC's former CE Ketso Gordhan abruptly resigned in September after clashing with the board. He then...
anzania's attorney general resigned late on Tuesday, becoming the first political casualty in an energy corruption scandal in the east African country that has led Western donors to delay aid and weakened the currency. The resignation followed a vote in parliament...
More
 
 
Recent Research Reports
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
 
 
 
 
 
This Week's Magazine
South Africa remains an important manufacturing and export platform for Ford Motor Company, says executive chairperson Bill Ford. However, he adds that other countries on the continent are “becoming interesting”, and that the US carmaker is casting its net wider for...
TO BE PHASED INTO SERVICE The first MeerKAT dish, with another 63 to come
Germany’s Max-Planck-Society (MPG) and the Max-Planck-Institute for Radio Astronomy (MPlfR) are investing €11-million (about R150-million) into South Africa’s MeerKAT radio telescope array programme. The money will be used to design, build and install S-band radio...
Infrastructure spend in sub-Saharan Africa will grow from $70-billion in 2013 to $180-billion by 2025, says PwC capital projects and infrastructure Africa leader Jonathan Cawood. This is one of the findings of PwC’s Capital Projects & Infrastructure report on East...
Private-owned defence and aerospace manufacturer Paramount Group and the Ichikowitz Family Foundation unveiled its Anti-Poaching Skills and K9 Training Academy in Magaliesburg last month.
MATT BARKER Wireless networks should enable users to engage and must provide relevant information to them based on their activity and location
The inclusion of Bluetooth to provide sub-three meter accuracy and heightened functionality for users is one of the ways to change existing wireless networks into engagement networks. An engagement network differs from common wireless networks in that it enables the...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks