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4^th September, 2008

NAAMSA MEDIA RELEASE : FOR IMMEDIATE RELESE

NAAMSA REACTION TO THE ANNOUNCEMENT OF THE AUTOMOTIVE PRODUCTION AND DEVELOPMENT PROGRAMME (APDP) TO REPLACE THE MOTOR INDUSTRY DEVELOPMENT PROGRAMME (MIDP) FROM 2013 THROUGH 2020

On behalf of the South African new vehicle manufacturing industry, the National Association of Automobile Manufacturers of South Africa (NAAMSA) welcomes the conclusion of the MIDP Review and the announcement by the Ministry of Trade and Industry of the structure and provisions of the Automotive Production and Development Programme aimed at facilitating further significant growth and development of the South African component and vehicle manufacturing industries through 2020.

Commenting on the announcement, the President of NAAMSA, Dr Johan van Zyl, commended the Ministry of Trade and Industry and Government “For achieving a major breakthrough in finalising a future automotive industry policy framework in line with South Africa’s international trade obligations. The Department of Trade and Industry had presided over an intensive process involving extensive research and consultations and had managed to ensure that the key industry stakeholders accepted the imperative of a programme which balanced the needs of the automotive industry with Government’s industrial policy objectives as well as the public interest.”

The Automotive Production and Development Programme framework and provisions covering import duties, the local assembly allowance, a production incentive and investment allowances - provided the South African automotive industry with a solid basis to rise to the challenge of becoming more internationally competitive and to expand the production of new cars and light commercial vehicles in South Africa. Commenting on the elements of the automotive production and development programme, Dr Van Zyl said “the local assembly allowance would support the continued production of motor vehicles in South Africa whilst the investment allowance, supplemented by the discretionary company specific allowance, would provide the necessary incentives to stimulate domestic vehicle production and to provide a strong catalyst for additional localisation”.

The release of the detailed elements of the Automotive Production and Development Programme from 2013 through 2020 would enable vehicle manufacturers and their suppliers to plan strategically for the future and to finalise investment decisions with confidence and certainty. It should also enable various manufacturers to tender for the production of new models in South Africa.

NAAMSA was aware of Government’s objectives for the industry through 2020 and whilst the target of doubling vehicle production in South Africa by 2020 was ambitious and challenging, the industry remained committed to doing everything possible to achieve the official objectives. Dr Van Zyl said that “There was no doubt that the new programme would stimulate production of motor vehicles and automotive components and encourage further investment in the industry and assist the process of stabilizing and creating employment over time. At the same time, however, it should be recognised that the industry faced ever increasing competition – domestically and internationally”.

One of the greatest challenges facing the vehicle manufacturing industry would be to develop and maintain the trust and confidence on which close partnerships with component manufacturers could prosper. Vehicle manufacturers and their suppliers would have to work together to reduce the cost gap against world class bench marks and collaborate closely to achieve sustained net cost reductions to enable the industry to become more competitive internationally, to grow the industry’s export business and to provide more affordable product to local market. In this context, the role and contribution by the trade unions would also prove of vital importance.

Individually, each vehicle manufacturer would evaluate the Dti’s announcement and the provisions of the new programme and manufacturers would, from a strategic and operational perspective, take steps to optimise their production plans and operations in terms of the post 2012 programme.

The industry, on a collective basis, viewed the provisions of the new programme in a positive light and believed that the new programme would generate confidence in the future of the South African automotive industry, both within South Africa and internationally.

Further enquiries may be directed to Dr Johan van Zyl, President, NAAMSA, telephone (011) 809 2215 or Cell 083 251 2761 or Nico Vermeulen, Director, NAAMSA at e-mail naamsa@iafrica.com or telephone (012) 323 2980 / 81 or Cell 083 656 7781. NAAMSA OFFICES: PRETORIA
4TH SEPTEMBER, 2008