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Oct 11, 2011

Local auto industry to benefit from new procurement rules, says Davies

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Local vehicle producers will benefit from government’s new preferential procurement regulations, which will come into effect on December 7, promised Trade and Industry Minister Rob Davies at the official opening of the Johannesburg Motor Show on Monday.

He said these regulations will empower government to prescribe to its departments and State-owned enterprises that it may only procure locally manufactured products, or locally manufactured products with a prescribed minimum local content, from certain designated sectors of the economy, such as the automotive industry.
“Government is embarking on a procurement effort in support of local production. In the automotive industry we are looking at designating buses for local procurement, wherein we would seek for government and State agencies to buy locally manufactured buses. We may also include other categories of vehicles,” noted Davies.
He said the designation of products is part of government’s plan to leverage procurement in order to raise domestic production and employment.
The automotive industry (manufacturing and retail) contributes around 6% to the country’s gross domestic product, with sector exports amounting to almost 12% of the country’s total exports.

Davies said this was made possible by the support government provided to the industry, mainly under the current Motor Industry Development Programme (MIDP).

The minister told the gathering the MIDP, which was to be replaced by a new programme, the Automotive Production and Development Programme (APDP), in 2013, had succeeded in a number of fields.
“Under the MIDP, total investment of at least R4-billion is to be made during 2011, while more than R32-billion has been cumulatively invested since 2000. Also, an estimated 90 000 people are directly employed in automotive manufacturing, while about 200 000 are employed in retail and [the] aftermarket.”

A key objective of the APDP is stimulating the expansion of vehicle production to 1.2-million vehicles a year by 2020.

Edited by: Creamer Media Reporter
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