Trade and Industry Minister Dr Rob Davies has approved the new Medium and Heavy Commercial Vehicles – Automotive Investment Scheme (MHCV-AIS) guidelines aimed at stimulating investment into the production of these vehicles in South Africa.

The MHCV-AIS, which was a subcomponent of the Automotive Investment Scheme (AIS), would be made available to investment projects that had a production start date from April 1, 2014 onwards, with the commissioning period not having exceeded 18 months prior to the start of production.

“The broadening of the scope of the AIS to include MHCV manufacturers is in line with the broader objectives of the AIS programme, as well as Vision 2020. The MHCV sector value chains are highly underdeveloped and there are opportunities to deepen their value addition and potential for employment creation,” Davies said.

He added that the extension of the AIS programme to these manufacturers was required to achieve certain developmental objectives including an increased market size, investment, deepening supply chain, technology transfer and to create and sustain jobs in the automotive sector.

The Department of Trade and Industry explained that the MHCV-AIS provided a nontaxable cash grant of 20% of the value of qualifying investment in productive assets by MHCV manufacturers and 25% of the value of qualifying investment in productive assets by component manufacturers and tooling companies for MHCVs as approved by the department.

An additional nontaxable grant of 5% of the value of qualifying investment in productive assets could also be available to projects that met two of the following economic benefit criteria: tooling, research and development in South Africa, employment creation, strengthening the automotive supply chain, value addition and empowerment.

“It is envisaged that these guidelines, whose main theme is to stimulate investment in the production of MHCVs, will result in increased support and will lead to growth and development of the automotive sector in South Africa,” Davies noted.