The Department of Trade and Industry has created a special automotive incentive scheme for mini- and midi-bus taxis in a bid to provide incentives for local assembly and production.
The People-carrier Automotive Investment Scheme has a different duty tariff structure to the existing Automotive Investment Scheme, which applies only to passenger and light commercial vehicles.
Henry Pretorius, head of the incentive committee of the National Association of Automotive Manufacturers of South Africa, said on Wednesday (12 December) that mini-bus taxis had a smaller local market and had to be catered for separately with a different duty structure.
The size of the South African market for mini-and midi-bus taxis is estimated at between 20,000 and 22,000 vehicles a year.
Trade and Industry Minister Rob Davies says the People-carrier Automotive Investment Scheme may affect manufacturers assembling imported mini-bus taxis. Market leader Toyota began local assembly of the Ses'fikile model this year, with production volumes estimated at about 12,000 units annually.
Nissan South Africa indicated that it would introduce a minibus taxi assembly operation at the end of next year. Further, Chinese minibus taxi assembler Beijing Automobile Works announced last month that it would be assembling an Inyathi minibus, which would be much cheaper than its rivals.
Davies said the new incentive scheme was "one of the key action programmes" of the Industrial Policy Action Plan. The scheme would provide investment support to vehicle manufacturers, assemblers and automotive component suppliers.
"The People-carrier Automotive Investment Scheme is designed to stimulate growth through investment in new or replacement models and components that will result in the retention of jobs and strengthen the value chain," Davies said.
Projects eligible for the new scheme include semi-knock-down vehicles, which will qualify for a grant percentage of 20% along with an additional 5% for meeting certain economic benefit criteria. These include job creation, research and development.
Further, the special automotive incentive scheme will apply to completely knocked-down investments for which the grant percentage is 25% with an additional 10% for meeting the benefit criteria.
Component manufacturers can get a grant of 20% with an additional 10% but they will have to prove the existence of a contract to manufacture and supply the components.
In addition, the manufacturers will have to prove that their production of vehicles will generate at least 25% of total entity turnover - or R10m a year.
The targeted turnover has to be achieved by the end of the first full year of commercial production.
Source: Business Day via I-Net Bridge
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