It is clear that government’s proposed Medium and Heavy Commercial Vehicle Automotive Investment Scheme (MHCV-AIS) does not plan to incentivise the status quo, says National Association of Automobile Manufacturers of South Africa director Nico Vermeulen.
Truck assemblers currently pay no import duties if they practise semi-knockdown assembly (SKD, or partial assembly) of their vehicles locally.
The MHCV-AIS was released for comment in July this year.
Government’s current Auto- motive Production and Develop-ment Programme (APDP) has no truck and bus support programme, with these industries still operating largely under the programme preceding the APDP, the Motor Industry Development Programme, which expired in 2012.
Now, however, the MHCV-AIS aims to change this dispensation.
“We have commented on the scheme guidelines, and have had a meeting with the Department of Trade and Industry,” says Vermeulen.
He says the proposed scheme “clearly has two goals”.
The first is to encourage already established truck and bus assemblers to add value to their products, increase localisation and, through this practice, increase their labour contingent.
For truck and bus brands currently importing their products, the goal is to use incentives to move them to SKD assembly, says Vermeulen.
He says while APDP incentives for car and components manufacturers are, among other factors, driven by volume production, it appears that truck and bus assembly will be investment-incentive-driven, because of low-volume commercial vehicle production in South Africa.
It is currently proposed, under the published guidelines, that the MHCV-AIS will return 20% of the total value of their investments to relevant vehicle manufacturers and 25% to components and tooling companies.
“At this point, this is all we can say,” notes Vermeulen.
Truck brands such as Mercedes-Benz, MAN, Tata, Isuzu, Hino, Volvo and UD Trucks assemble vehicles in South Africa, with Hyundai and FAW having been added to the fold this year.