naamsa | The Automotive Business Council has hit back at critics describing the Automotive Production and Development Plan (APDP) as a honeypot, while also questioning the argument in favour of scrapping the government support programme to enable a reduction in the country’s value-added tax (VAT) rate.

The auto industry body says national government supports the domestic automotive industry as “the returns far exceed the incentives”.

“The APDP is not designed to subsidise manufacturers, it is designed to grow South Africa's industrial economy,” naamsa notes in a statement.

naamsa says critics of the APDP focus almost exclusively on its perceived fiscal cost, while ignoring the economic returns it generates.

“That is neither sound economics, nor sound public policy.

“Based on the figures cited by critics, the APDP is estimated to provide approximately R35-billion to R40-billion in duty rebates and production support.

In return, however, says naamsa, the programme in 2025 alone generated around R137-billion in audited local value-addition (LVA) through domestic manufacturing, [component] supplier development and localisation, while it also supported R270.8-billion in automotive exports, making the automotive industry one of South Africa’s largest export earners.

“Measured purely on these two indicators, every R1 associated with the APDP supports nearly R4 in domestic manufacturing value, and almost R8 in export earnings.

“This excludes the wider economic benefits generated through employment, supplier development, corporate taxes, pay-as-you-earn, VAT, technology transfer and foreign direct investment.

“The real question is therefore not ‘what does the APDP cost?’ The more appropriate question is, ‘what would South Africa lose without it?’”

Without a globally competitive automotive industry, South Africa would forfeit billions of rand in exports, local manufacturing output, investment and skilled employment, which would weaken the country's industrial base, reduce foreign exchange earnings and ultimately shrink the national tax base, states naamsa.

“That is why the APDP should be viewed not as a fiscal cost, but as one of South Africa’s highest-performing industrial investments.

“Industrial policy cannot be assessed through static accounting alone. It must be evaluated on its net economic and fiscal impact.”