News on car industry rescue ‘within days'

Mkhululi Molta, the automotive director at the department, said it was holding internal consultations as well as discussions with other government units.

Molta said the department was still in the “sensitive, technical stages” of the talks and stressed that it was mindful of the “urgency” of the crisis in the industry, which was shedding jobs.

In the next few days, the department would “provide a full update”, he said, hinting that a task team might unveil measures aimed at bailing out the sector and saving jobs.

The task team, made up of industry and departmental representatives, was expected to come up with specific measures by the end of last month.

The team was set up in late February at the request of the industry, and comprises representatives from the industry and department officials.

Proposals are believed to include tax adjustments to stimulate demand.

The industry has said the government could also help facilitate credit access in the form of bridging loans.

But Finance Minister Trevor Manuel has said measures such as scrapping allowances, tax incentives or temporary rebates for trade-ins would not work.

Norman Lamprecht, executive manager at the National Association of Automobile Manufacturers of SA, said new vehicle sales fell 34%, or by 53 000 units, in the first quarter.

If conditions did not improve significantly, sales would fall by 150 000 units to 338 000 this year, leading to output cuts and further job losses.

He said that the slump in vehicle sales would also have a knock-on effect for the automotive parts sector as demand for parts and vehicle accessories would decline, which in turn would have repercussions on component suppliers.

Seven component producers have already gone bankrupt.

Stewart Jennings, president of the National Association of Automotive Component and Allied Manufacturers, said there could be further insolvencies in the next few months.

Source: Business Day

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