The National Association of Automotive Component and Allied Manufacturers (Naacam) would like to see a completely new programme replace the Automotive Production and Development Programme (APDP) when it concludes in 2020, says Naacam adviser Roger Pitot.
“We would like to see something completely different, yes – no tweaks or modifications to the APDP and no extension of the programme beyond 2020.”
Pitot says Naacam will lobby for a government support programme that will make it more challenging for vehicle manufacturers – most of them with a strong focus on exports – to achieve duty neutrality.
“Inevitably it would include duty rebates, so as not to draw on the fiscus, but it should, structurally, be more difficult to achieve duty neutrality, as this encourages imports and hinders localisation.
“We would, however, like any new APDP-type programme to retain its focus of increasing production volumes and achieving higher localisation within the South African automotive industry.”
A recent visit to Thailand has provided Naacam with some guidance on what it would seek in a replacement programme.
“We were very impressed with the Thai government’s master plan and its focused incentives. We would like to see incentives in the South African industry become much more focused beyond 2020 – for example, on certain types of vehicles or certain types of components,” notes Pitot.
“We shall fully cooperate with the Department of Trade and Industry (DTI) to look for alternatives to the current APDP.”
Pitot believes the DTI will have to start the process to draft a replacement programme for the APDP this year.
The DTI wrapped up a review of the APDP last year, announcing a number of changes to the programme, one of which would see vehicle manufacturers qualify for incentives at yearly volumes of 10 000 units a year, instead of 50 000 units a year.
Naacam is not entirely pleased with the changes, says Pitot.
“What we have is a concession to vehicle assemblers that enables them to earn APDP benefits at lower volumes, with nothing on the table for component manufacturers, except a welcome freezing of catalytic converter incentives in 2017, instead of a continuing reduction.
“None of the changes will assist in addressing the low levels of localisation in the country. With some vehicle manufacturers earning duty credits surplus to their own requirement, they have little incentive to increase the use of local parts.
“It is clear that government did not want to make any major changes to the APDP that might jeopardise investments, which is understandable. However, it is disappointing that some of the minor tweaks discussed last year, which would have sent signals to the industry that government was serious about volumes and localisation, were abandoned.”