The Automotive Production and Development Programme (APDP) will be extended to 2035 with tough demands on Original Equipment Manufacturers (OEMs) for commitments to increase local and black participation in the industry, particularly in the production of sub-components.

Minister Davies wants average industry local content – which includes labour and manufacturing costs, as well as the value of SA-made components – to rise from 38% to at least 60%.

The current annual production of the SA motor industry is about 600,000 vehicles, or 0.62% of the international total with a target to increase this to at least 1% requiring South Africa to build 1-million to 1.4-million vehicles by 2035.

As the APDP stands, OEM’s earn incentives according to the number of vehicles they build.

 From 2021, the determining factor will be local content.

To support this, SA’s vehicle sales, locally and through exports, need to rise. Having said this, it’s the right time for aspirant manufacturers of components and sub-components to set up local and empowered manufacturing concerns.

With a 2 year window for OEM’s to feel the pinch of the new plan, it’s the appropriate time to secure intentions and market opportunities, and raise the necessary capital to set up the relevant manufacturing plants.

A R4.5 billion kitty has been pulled together by a number of the OEMs to support new entrants while the DTI’s Black Industrialist and Automotive Incentive Schemes provide funding of between 20% to 50% of the investment in grants.

Both incentives focus on the investment into equipment, tools and machinery.